Shipping containers in port

Beijing responds to US taxes on Chinese goods with tit-for-tat tariffs

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The Chinese government has announced hefty tariffs on major US imports worth $50bn, swiftly retaliating to the White House’s proposal of 25 per cent tariffs on $50bn of Chinese imports.

The US tariffs – which began with steel and aluminium tariffs announced in March – have been applied in response to complaints that the Chinese government has forced foreign companies to hand over their intellectual property (IP) in exchange for the Chinese market. Beijing denies these accusations.

The proposed tariffs affect 1,300 Chinese goods, including valuable technologies such as telecommunications equipment, antibiotics, flat-screen televisions, LEDs, machinery components and industrial robots. These goods are thought to have been targeted due to their significance to China’s industrial policy.

“The Trump administration is right to push back against China’s abuse of economic and trade policy,” said Robert Atkinson, president of the Information Technology and Innovation Foundation, a think tank.

“But imposing tariffs on producer goods will inadvertently hurt Americans through reduced capital investment and lower productivity growth.”

The Chinese ministry for commerce criticised the Trump administration of violating global trade rules, and said that the brisk response – announced within hours – was motivated by a need to protect the “legitimate rights and interests” of China.

During a briefing, Geng Shuang, a spokesperson for the Chinese foreign ministry, said that opportunities for resolving the trade dispute had been “repeatedly missed” by their US counterparts.

China began by applying taxes on $3bn of US goods, including wine, fruit, nuts and pork. The total $50bn of tariffs announced so far will fall on 106 different US goods such as cars and older aircraft, as well as soybeans, whiskey, beef, cotton and some chemicals. It is not yet known when the charges will take effect.

There are fears that the US-China trade dispute could quickly escalate into a trade war between the two economic giants, with Chinese and American consumers paying the price for the hostilities. The announcement of Beijing’s tariffs triggered slides in US stock futures by 1.5 per cent and of US soybean futures of 5 per cent.

“The assumption was China would not respond too aggressively and avoid escalating tensions. China’s response is a surprise for some people,” said Julian Evans-Pritchard, senior China economist for Capital Economics, in a statement to Reuters.

“It’s more of a game of brinkmanship, making it clear what the cost would be, in the hopes that both sides can come to agreement and none of these tariffs will come into force.”

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