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China Strikes Back at the U.S. With Plans for Its Own Tariffs China Strikes Back at the U.S. With Plans for Its Own Tariffs
(about 4 hours later)
SHANGHAI — China hit back at the United States on Wednesday with proposed tariffs on $50 billion worth of American soybeans, cars, chemicals and other goods, in a move likely to spark fears that the countries’ escalating confrontation could become an all-out trade war. SHANGHAI — China hit back at the United States on Wednesday with proposed tariffs on $50 billion worth of American soybeans, cars, chemicals and other goods, in a move likely to stoke fears that the countries’ escalating confrontation could become an all-out trade war.
Moving with unusual speed, Chinese officials outlined plans to make it more costly to import 106 categories of American goods into China. The move came just hours after the Trump administration detailed its plan to impose tariffs on a similar value of Chinese-made aircraft parts, cars and car parts, televisions, steel and much more. Moving with unusual speed, Chinese officials outlined plans to make it more costly to import 106 types of American goods into China. They are intended to hit the United States square in the farm belt — a major section of President Trump’s political support but also a major supplier of what China stocks in its supermarkets.
The American products come largely from Republican-dominated states, where lawmakers might be expected to have some influence with President Trump and could persuade him to back down from his latest trade demands. Beijing’s plan to institute new tariffs was announced just hours after the Trump administration detailed its own protections on a similar value of Chinese-made aircraft parts, cars and car parts, televisions, steel and much more. Following a previous round of tit-for-tat tariffs unveiled over the past few days, the new measures have sparked concerns that the dispute could widen further, hurting jobs and growth in both countries.
Investors drove financial markets lower over the prospect that the two sides were not yet done fighting.
“China has never succumbed to external pressure,” Zhu Guangyao, vice minister of finance, said at a news briefing on Wednesday. He added, “External pressure will only make the Chinese people more focused on economic development.”“China has never succumbed to external pressure,” Zhu Guangyao, vice minister of finance, said at a news briefing on Wednesday. He added, “External pressure will only make the Chinese people more focused on economic development.”
Chinese retaliation for the Trump administration’s latest move had been widely expected. Beijing typically responds to overseas tariffs with similar ones of its own, and Chinese officials had promised a proportional response if the Trump administration went ahead this week with the next step toward broad tariffs on Chinese goods. The question now is whether the two sides will intensify their efforts to punish each other before they sit down to negotiate. Neither set of tariffs go into effect right away, though the exact timing of the Chinese measures was not clear.
But in the past, China has tended to wait days and sometimes weeks before striking back. The dueling tariffs still do not impact the majority of trade between the two countries, which is valued at nearly $650 billion a year. Still, economists say that the clash could escalate quickly if the two sides fail to find a way to quickly resolve their differences, threatening a commercial relationship that is essential to the world economy.
The tit-for-tat tariffs are part of a wider clash looming over trade between the world’s two biggest economies. Stock markets around the world have taken a hit in recent weeks as Washington and Beijing have escalated their trade dispute. Letting the dispute turn into a test of wills would be a mistake, said Jie Zhao, a senior research fellow at Fudan University in Shanghai.
Chinese officials said on Wednesday that they saw room to negotiate. “We should negotiate in a professional way,” Ms. Zhao said, “and make it less ideological and emotional.”
“China’s attitude is clear,” Mr. Zhu said. “We don’t want a trade war because a trade war would hurt the interests of both countries.” China’s proposed new tariffs cover a significant chunk of what it buys from the United States. The protections on the $50 billion of goods announced on Wednesday, together with those on the $3 billion worth of products that Beijing unveiled earlier this week in retaliation for American tariffs on global steel imports, account for about a third of China’s American imports.
Two separate rounds of tariffs are now playing out between the United States and China, one involving metals and the other involving advanced manufacturing technologies. By contrast, because the United States imports significantly more from China, tariffs on the same amount of products make up roughly one-ninth of its Chinese imports. That gives the United States more room to find other Chinese products to target.
Citing a need to protect domestic suppliers for national security reasons, the United States on March 23 imposed tariffs on $20 billion a year worth of steel and aluminum imports from around the world, including almost $3 billion a year from China. Beijing retaliated on Monday by imposing tariffs on nearly $3 billion a year of American pork, wine, stainless steel pipes and other goods. Even as Chinese officials struck a defiant tone on Wednesday, they still said they wanted to avoid escalating the conflict.
The dispute over advanced manufacturing technologies has played out in parallel, with the United States alleging that China has repeatedly violated American intellectual property and is now using government subsidies to build domestic companies into powerhouses in high-tech manufacturing industries. China denies the allegations. “China’s attitude is clear,” Mr. Zhu, the vice minister of finance, said. “We don’t want a trade war because a trade war would hurt the interests of both countries.”
The dueling tariffs are relatively modest in the context of a trade relationship valued at nearly $650 billion a year. Still, economists worry that the clash could escalate quickly if the two sides can’t find a way to resolve their differences, threatening a commercial relationship that is essential to the world economy. China could still fight back in other ways. Its control over its domestic economy and news media, and its homegrown internet, give it a strong hand in controlling public opinion and minimizing the potential impact on its consumers. In the past, China has mobilized its vast ranks of consumers to turn up their noses at products from Japan, the Philippines and South Korea during political disputes, though getting Chinese consumers to stop buying iPhones and Chevrolets could be trickier.
Chinese experts said that a pivotal moment had arrived in Sino-American trade relations, with each side poised to impose heavy tariffs in the coming months on industries that are important to the other. The two sides are clashing with the future in mind. President Trump instituted his latest round of tariffs against China while citing Beijing’s government-driven efforts to retool the country’s economy to focus on the technologies of the future. Known as the Made in China 2025 program, the plan specifies efforts to build up cutting-edge industries like robotics, aerospace and electric cars.
“A key time has come for the United States and China to form a new consensus that includes intellectual property and the opening up of markets,” said Song Guoyou, the deputy chief of the American Studies Center at Fudan University. “Otherwise, trade may fluctuate a lot.” Many companies in Europe and the United States say they fear the program will create state-supported competitors, an argument that has won backing in the Trump administration. Some companies say that Beijing finds ways to force them to hand over technology if they want to sell their wares in China, an allegation that Chinese officials dispute.
China appears to be showing little interest in negotiating its effort to build up the technologies of the future. Known as the “Made in China 2025” program, the plan specifies efforts to build up cutting-edge industries like robotics, aerospace and electric cars. A report in state-controlled media on Wednesday described the development of advanced manufacturing as “an inherent requirement for the transformation and upgrading of China’s manufacturing industry, and it is also the only way for China’s economy to enter a high-quality development stage.” China appears to show little interest in putting the Made in China 2025 efforts on the negotiating table. A report in state-controlled media on Wednesday described the development of advanced manufacturing as “an inherent requirement for the transformation and upgrading of China’s manufacturing industry, and it is also the only way for China’s economy to enter a high-quality development stage.”
The Trump administration contends that China has forced American companies to transfer a lot of technology in exchange for access to the Chinese market. Global trade rules prohibit forced technology transfers. China denies that it has required such transfers. For now, China’s new tariffs could create a more immediate issue for the Trump administration.
Chinese official media said the new tariffs announced on Wednesday will amount to 25 percent on the American products. China imported about $50 billion worth of those goods last year, the reports said. While they include plenty of goods Americans make, they have a heavy focus on products Americans grow: soybeans, corn, cotton, beef, frozen orange juice, even tobacco and whiskey. Many of those products come largely from Republican-dominated states, where lawmakers might be expected to have some influence with President Trump and could therefore persuade him to back down from his latest trade demands.
For manufactured goods, the new Chinese tariffs include cars and car parts, plastics, aerospace products and chemicals. Many of those products are also sold by European companies, giving Chinese buyers alternatives. The new tariffs announced on Wednesday will amount to 25 percent on the American products.
Chinese officials — who blamed President Trump for provoking the clash — have appealed to the World Trade Organization, which sets trade rules and moderates disputes, to resolve the feud. But both sides risk censure by the W.T.O. — the Trump administration for its tariffs, and China for swiftly retaliating without a proper review.
“A key time has come for the United States and China to form a new consensus that includes intellectual property and the opening up of markets,” said Song Guoyou, the deputy chief of the Center for American Studies at Fudan University. “Otherwise, trade may fluctuate a lot.”