China Tariff Retaliation Kicks In as Trade War Ratchets Up
China Tariff Retaliation Kicks In as Trade War Ratchets Up
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China raised tariffs on tens of billions of dollars of goods imported from the U.S., implementing the promised retaliation to President Donald Trump’s latest round of trade war duties on about $200 billion in Chinese exports.
As of Saturday in Beijing, retaliatory extra tariffs have been imposed on U.S. exports at the following levels:
- 25% tariffs on 2,493 items, up from 10% previously. These include some mechanical parts, natural gas and skincare products
- 20% tariffs on 1,078 items, up from 10% previously. These include some machinery, wood and optical instruments
- 10% tariffs on 974 items, up from 5% previously. These include sheet glass, lasers and control valves
- 5% tariffs continue on 595 items. Auto parts, which were initially on the list but have been exempted since January, are still excluded
The expected tariffs come as challenges pile up for the world’s second-largest economy, with output slowing and signs of financial stress appearing. Both countries have signaled that they are digging in for a long-term rivalry, with one Chinese government-affiliated researcher seeing tensions lasting until 2035 and the government announcing that it will fight till the end if the U.S. keeps escalating.
“The most evident impact of the retaliatory tariffs will be on sentiment,” said Liu Peiqian, Asia strategist at Natwest Markets Plc in Singapore, adding that markets have shown higher stress levels in May. “The economic impact of the tariffs will be minimal. What we are actually watching is whether the policy makers will tweak the easing policy. ”
The bilateral tariffs have dented U.S.-China trade, with goods hit with the taxes suffering a blow even as exporters front-loaded shipments. While punitive duties now cover more than two thirds of China’s imports from the U.S., the actual impact may be mitigated as the government will allow companies to apply for exemptions. Goods will be exempted for a year after approval, according to the Ministry of Finance.
Airplanes, some petroleum-based oils, turboprop engine parts, and some integrated circuits are among goods still not covered by any punitive duties.
The trade war is spinning out of the tariff domain, with the U.S. blocking Huawei Technologies Co. from purchasing U.S. products or doing business there, and looking to do the same to other Chinese hi-tech companies. Beijing has readied a plan to restrict exports of rare earths to the U.S. if needed, as both sides in the trade war dig in for a protracted dispute, Bloomberg reported Friday.
“Uncertainties surrounding trade frictions, particularly the technology restrictions, might still weigh on sentiment,” Wang Hanfeng, an analyst at China International Capital Corp., wrote in a note Friday. “There are still lots on uncertainties especially related to the technology restrictions.”
To contact the reporters on this story: Natalie Lung in Hong Kong at flung6@bloomberg.net;Xiaoqing Pi in Beijing at xpi1@bloomberg.net
To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, James Mayger
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