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U.S. Goes Ahead With New Tariffs on Chinese Products

The Wall Street Journal. logo The Wall Street Journal. 2/09/2019 William Mauldin, Chao Deng
a blue container on a train track © frederic j. brown/Agence France-Presse/Getty Images

Tariffs on clothing and other imports from China went into effect on Sunday, escalating the trade war in a move expected to squarely hit consumers.

The U.S. tariffs of 15 percent on tools, apparel items, some footwear and many electronics will be charged on imports valued at $US111 billion ($AU165 million) last year, according to an analysis by The Wall Street Journal. Additional tariffs of 15 percent on $US156 billion ($AU232 billion) of smartphones, laptops, toys, videogames and other products have been postponed until Dec. 15, after the period when goods are typically imported for the holiday season.

“Absolutely worth it, we don’t want to be servants to the Chinese!” President Trump said Sunday in a tweet, referring to the process of tariffs forcing American importers to look for other suppliers. The tariffs are “about American freedom,” he added in another tweet. “There is no reason to buy everything from China!”

Mr. Trump cited the views of economist Peter Morici, who was interviewed Sunday on Fox News and said the tariffs would average Americans “not as much as the critics say” due to shifts in exchange rates and supply chains.

Business groups and others criticised the tariffs as harmful for American companies and consumers.

AFL-CIO President Richard Trumka credited Mr. Trump for “taking on China” but said, “unfortunately, he’s done it the wrong way.”

“To take on China, there has to be a multilateral approach. One country can’t take on China to try to dry up its overcapacity because they just send it through to you in other ways,” Mr. Trumka said an interview on Fox News.

Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce, said that the president was using the wrong tactic to take on unfair Chinese trade practices. “The tariffs — import taxes by any other name — are or will cost every American household between $US600 ($AU892) and $US1,000 ($AU1,487) by the end of the year.”

Previous tariffs on Chinese imports are costing the average U.S. household $US831 ($AU1,235) a year through higher prices and reduced economic efficiency, according to a May paper published by the Federal Reserve Bank of New York. 

The U.S. previously imposed tariffs of 25 percent on about $US250 billion ($AU372 billion) of Chinese imports, largely on items used by businesses, and those tariffs are set to rise to 30 percent in a month. Mr. Trump has characterised them as a penalty on China, but they are paid by importers in the U.S.

Chinese retaliatory measures also went into effect on Sunday, with more to come on Dec. 15. The biggest categories of American exports to be hit with extra tariffs Sunday include $US3.2 billion ($AU4.8 billion) in annual soybean shipments, $US2.55 billion ($AU3.79 billion) in crude oil and $1.16 billion ($AU1.7 billion) in pharmaceuticals, according to Panjiva Research.

As Mr. Trump lays on more tariffs, Beijing’s hopes for a trade deal are waning, say people following the trade talks. “China’s leadership has concluded they’re probably not going to get a deal from Trump,” said Arthur Kroeber, founding partner at research firm Gavekal Dragonomics. “China doesn’t see an incentive to help out at this point.”

Mr. Kroeber and other analysts say China’s strategy involves toughening out the trade turbulence by shoring up its own economy, and waiting for the increased pain on American farmers and companies to translate into lobbying efforts against the Trump administration strategy.

At the same time, Beijing appears willing to continue engaging in negotiations with the U.S.

Wei Jianguo, a former Chinese vice minister of commerce now with Beijing-based think tank China Center for International Economic Exchanges, said Beijing still plans to send trade negotiators to Washington this month to try to get a deal to remove tariffs, however unlikely. “China is prepared either way,” he said.

Chinese foreign ministry spokesman Geng Shuang said at a briefing Friday that “trade teams on both the U.S. and China sides have always maintained effective communication.“ He added that ”we hope the U.S. side can demonstrate good faith and take real action, to work in concert with the Chinese side, to find a solution to the problem on the basis of equality and mutual respect.”

Trade talks have mostly stalled since late May, when negotiators were believed to be close to a deal. The U.S. side accused China of backing down on a pledge to make structural changes, such as legal measures to protect intellectual property, while Beijing said it wanted the U.S. to remove existing tariffs before implementing the accord.

Since then negotiators have sought, so far without success, to reach a limited preliminary arrangement that would have China committing to buying more U.S. farm products and the U.S. agreeing to ease off restrictions on China’s Huawei Telecommunications Co.

Mr. Trump said late Friday he couldn’t say if he would speak to Chinese President Xi Jinping over the weekend. The two presidents in the past have used personal contact to de-escalate trade tensions, but recent friction over Huawei and other issues have weighed on the relationship.

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