China to hike tariffs on $60 billion of U.S. goods

Visitors tour the Forbidden City decorated with red lanterns and illuminated with lights during the Lantern Festival in Beijing Tuesday Feb. 19 2019

As the latest counter-measure against the escalating Sino-U.S. trade friction, China has made a decision to increase tariffs targeting 60 billion U.S. dollars' worth of U.S. products, effective June 1, 2019.

The new rate of 25% will apply to 2,493 USA products, with other goods subject to duties ranging from 5 per cent to 20 per cent, it said. It imposed 10 per cent charges on $60 billion of imports but left other goods unaffected, possibly out of concern for Chinese companies that depend on US technology and components.

"China will never surrender to external pressure", foreign ministry spokesman Geng Shuang said at a regular briefing on Monday.

White House chief economic adviser Larry Kudlow warned on Sunday that there could be negative consequences to Trump's trade war, admitting that "both sides will suffer on this" while at the same time claiming that the overall economic impact would not be significant, because the economy is "in terrific shape".

Trump has meanwhile also ordered the start of a process to impose new duties on about $325 billion worth of additional Chinese merchandise.

Beijing rejects the charges and the United States and China have so far exchanged tariffs on more than $360 billion in two-way trade.

Trump, who has embraced protectionism as part of an "America First" agenda, added that he had not yet decided whether to go ahead with tariffs on roughly another $325bn in goods from China.

"China should not retaliate - will only get worse!".

Trump, however, maintains that the tariffs will do greater damage to China's economy.




The move comes three days after the USA more than doubled tariffs on $200bn of Chinese imports.

A stumbling block has been US insistence on an enforcement mechanism with penalties to ensure Beijing carries out its commitments. They said that loss could widen to one percentage point if both sides extend penalties to all of each other's exports.

Chinese officials have invited the top USA envoys - Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin -to Beijing, Kudlow said on Fox News.

While Kudlow said that China has invited top USA trade officials to Beijing to continue talks, no date for a potential 12th round of negotiations has been announced.

Any softening in US stock prices would have an additional advantage from the White House perspective: It would add to the pressure on the Fed to cut interest rates.

Trump on Monday warned Beijing not to go too far in responding to USA trade actions after China rolled out its retaliation to his move to hike import duties on a separate US$200 billion tranche of imports from China last week.

Earlier on Monday, Mr Trump told China not to intensify the trade dispute and urged its leaders, including President Xi Jinping, to continue to work to reach a deal.

China retaliated on Monday with $60 billion in tariffs ranging from five to 25 per cent. The Washington Post reported Monday evening that the Office of the U.S. Trade Representative had begun to prepare those levies.

A stumbling block has been USA insistence on an enforcement mechanism with penalties to ensure Beijing carries out its commitments.

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