from Zero Hedge
Update: Beijing responded that it would retaliate with tariffs in equal scale to the $50BN of duties on Chinese goods unveiled by the Trump administration.
“China will immediately introduce countermeasures of the same scale and strength,” an unnamed Chinese commerce ministry spokesperson announced on the ministry’s website.
- CHINA SAYS DOESN’T WANT TRADE WAR, BUT WILL HAVE TO RETALIATE
- CHINA TO IMMEDIATELY TAKE MEASURES OF SAME SCALE AGAINST U.S.
- CHINA COMMERCE MINISTRY SAYS THE MEASURES HARM INTERESTS ON BOTH SIDES
Earlier in the day, Chinese Foreign Ministry spokesman Geng Shuang told a regular daily news briefing said that “If the United States takes unilateral, protectionist measures, harming China’s interests, we will quickly react and take necessary steps to resolutely protect our fair, legitimate rights.”
The ministry did not provide a full list of the tariffs or details about when they would be imposed. “At the same time, all the economic and trade-related achievements previously reached by the two sides will be rendered invalid,” the ministry cited the spokesperson as saying, referring to the results of earlier rounds of China-US trade talks.
Meanwhile, US Trade Rep was on Fox News where he tried to downplay the significance of the trade war and the severity of the moves, and says that he hopes that they don’t lead to a “rash” reaction from China.
- LIGHTHIZER: HOPE THAT THIS LEADS THIS TO FURTHER NEGOTIATIONS
- LIGHTHIZER CALLS CHINA TARIFFS VERY MODERATE, VERY APPROPRIATE
- LIGHTHIZER: U.S. CAN’T FIND ITSELF SECOND TO CHINA IN TECH
- USTR’S LIGHTHIZER SPEAKS ON FOX BUSINESS NETWORK
- LIGHTHIZER: HOPE TARIFFS DOESN’T LEAD TO RASH CHINESE REACTION
* * *
At 8am EDT on Friday, as previewed extensively the the US formally announced the list of Chinese products to be hit with tariffs.
In the first official shot in the US-Chinese trade wars, the US will implement 25% tariff on $50BN in Chinese imports, representing 1,102 product lines with the list of imported goods among those listed on China’s 2025 plan.
The tariffs will be implemented in two tiers, the first one on July 6, and will cover $34BN in imports, and a second wave, which will cover the remaining $16BN, or 284 product lines, and will undergo further review in a public notice and comment process, including a hearing.
Today’s official escalation followed the disclosure in April of a preliminary list targeting about 1,300 products worth $50 billion in Chinese imports, and which was subject to public comment.
Having warned earlier in the week that he would confront China “very strongly” over trade in the coming weeks, Trump this morning said in a statement that the “The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices.”
He added that “These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs,” he said. “In addition, they will serve as an initial step toward bringing balance to the trade relationship between the United States and China.”
Some more details on the list of goods:
- USTR SAYS LIST INCLUDES 1,102 PRODUCT LINES TOTALING $50B
- USTR SAYS CHINA TARIFF LIST CONSISTS OF TWO SETS
- USTR SAYS FIRST SET OF CHINA TARIFFS TO START JULY 6
- USTR SAYS FIRST SET OF CHINA TARIFFS TO COVER $34B IN IMPORTS
- USTR TO FURTHER REVIEW $16B IN IMPORTS IN 2ND WAVE OF TARIFFS
Just as notable, the US vowed to pursue more tariffs if China retaliates, which as we speculated, is the reason why the Trump admin also plans on releasing a list of $100BN in goods subject to tariffs, and which can be implemented as soon as 60 days.
The full statement by the President Regarding Trade with China is below:
My great friendship with President Xi of China and our country’s relationship with China are both very important to me. Trade between our nations, however, has been very unfair, for a very long time. This situation is no longer sustainable. China has, for example, long been engaging in several unfair practices related to the acquisition of American intellectual property and technology. These practices, documented in an extensive report published by the United States Trade Representative (USTR) on March 22, 2018. harm our economic and national security and deepen our already massive trade imbalance with China.
In light of China’s theft of intellectual property and technology and its other unfair trade practices, the United States will implement a 25 percent tariff on S50 billion of goods from China that contain industrially significant technologies. This includes goods related to China’s Made in China 2025 strategic plan to dominate the emerging high-technology industries that will drive future economic growth for China. but hurt economic growth for the United States and many other countries. The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices.
These tariffs are essential to preventing further unfair transfers of American technology and intellectual propertv to China. which will protect American jobs. In addition. they will serve as an initial step toward bringing balance to the trade relationship between the United States and China.
The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products: raising non-tariff barriers: or taking punitive actions against American exporters or American companies operating in China.
And here is the full announcement from the US Trade Rep website:
SECTION 301 PRODUCT LIST
- On April 3, 2018, USTR announced a proposed list of approximately 1,300 tariff lines valued at an estimated $50 billion. The list was published in the Federal Register on April 6, 2018.
- To develop the initial proposed list, USTR worked with other agencies to identify products that serve to advance or unfairly benefit from China’s distortive industrial policies.
- This proposed list underwent extensive public comment. Interested persons filed approximately 3,200 written submissions. In addition, USTR and the Section 301 Committee convened a three-day public hearing from May 15-17, 2018, during which 121 witnesses provided testimony and responded to questions.
- USTR and the interagency Section 301 Committee have carefully reviewed the public comments and the testimony at the three-day public hearing. In addition, and in accordance with the President’s direction, USTR and the Section 301 Committee carefully reviewed the extent to which the tariff subheadings in the April 6, 2018 notice cover products containing industrially significant technology, including technologies and products related to the “Made in China 2025” initiative.
- Based on this review process, the list of products announced today:
- Removes 515 product lines from the initial proposed list;
- Recommends adding 284 product lines to target products that benefit from China’s industrial policies;
- Maintains 818 products lines from the initial proposed list unchanged.
- The 284 product lines being proposed will now undergo further review in a public notice and comment process, including a hearing. After completion of this process, USTR will issue a final determination on the products that would be subject to the additional duties.
- USTR will provide an opportunity for the public to request exclusion of a particular product from the additional 25 percent duty. USTR will publish the details of this product exclusion process in a subsequent Federal Register notice.
And now we wait China’s retaliation.