China stands its ground after Trump amps up tariff threats

Andrew Cummings
August 4, 2018

Last month, Washington and Beijing imposed a first round of 25 percent tariffs on 34 billion dollars worth of each other's goods.

The U.S. threat and pressure will not work.

"These [10%] duties, if applied, would cause disproportionate economic harm to United States interests", he stressed in testimony to USA trade officials, adding that any escalation would be catastrophic for U.S. companies.

Representatives of US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He have been speaking privately as they seek to restart negotiations, Bloomberg reported, citing sources.

The GSO has however warned exporters and importers to be prepared for any eventuality given the ongoing trade war between the US and China. Washington is expected to soon implement more tariffs on $16 billion in additional Chinese goods, which China has already announced it will match immediately.

Trump has imposed tariffs on Chinese steel and aluminum imports and another $34 billion in goods, mostly industrial equipment.

The two countries have not had formal talks on the trade dispute since early June.

China immediately vowed to retaliate though at the same time urged the USA to act rationally and return to talks to resolve the dispute.

Trade tensions between the USA and China have been escalating for months, driven by President Trump's aggressive rhetoric and policy positions.

During a hearing last week on the $16 billion tranche of tariffs, representatives from United States industries decried the indiscriminate selection process for identifying which products would be subjected to the trade sanctions, with some warning of dire consequences should tariffs be imposed on an additional $200 billion worth.

Increasing the pressure on China by threatening even higher tariffs could backfire.

But the move drew swift condemnation from USA business lobby groups anxious that tit-for-tat tariffs would start to hamper economic growth.

The drop in the PMI, a key indicator of manufacturing health in the world's second-largest economy, came as Trump's administration proposed a 25 percent tariff on another $200 billion in Chinese goods, up from an earlier 10 percent plan.

"Blackmail and pressurizing by the USA will never work for China and if they take measures to further escalate the situation we will surely take countermeasures to firmly uphold our legitimate rights and interests", said Chinese Foreign Ministry spokesperson Geng Shuang.

Last month, the USA proposed 10 percent tariffs on another $200 billion in Chinese products - from parachutes to sardines - in response to China's retaliation. Beijing responded by imposing the same penalties on the same amount of USA imports. "The cost increases will be passed on to customers, so it will affect most Americans' pocketbooks".

U.S. Trade Representative Robert Lighthizer said in a statement on Wednesday that Trump directed the increase from the previously proposed duty because China has refused to meet U.S. demands and imposed retaliatory tariffs on U.S. goods.

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