President Donald Trump threatened to inch closer to an all-out trade war with China on Jun 18, promising to impose new tariffs on $200 billion Chinese imports if Beijing does not abandon its intention to retaliate against US duties on imports announced last week.
He has asked US officials to subject a 10% tariff to Chinese goods, dwarfing the size of previous trade actions against China and escalating the dispute between the two countries.
“Therefore, today, I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent,” Trump said. “After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.”
China’s commerce ministry said the threat was “blackmail” and warned of a “strong countermeasures”. Earlier, Trump announced tariffs on all imports of steel and aluminum, including metals from China. Then China responded with a list of more than 100 U.S. goods worth about $50 billion. Last week, Trump announced 25% tariffs on $50 billion in Chinese imports, China retaliates with an equivalent set of tariffs.
With the world’s two largest economies on the brink of a full-fledged confrontation, spooking markets, many analysts increasingly fear that neither Beijing nor Washington will back down, resulting in an all-out trade war that could destabilize the global economy.
Explaining his decision, Trump said trade relations between the US and China must be fairer. He also stressed that he has a very good relationship with President Xi and will continue to work together on many issues but that the United States will no longer be used by China and other countries in the world for trade.
Trump has taken steps after months of shuttle diplomacy, including China’s offer to buy more US products, but these measures have failed to assuage his dissatisfaction with the soaring trade imbalances and China’s aggressive industrial development policies.
China had offered to increase purchases of U.S. goods by $70 billion to help reduce growing trade imbalances with the United States, while Trump had called for a $200 billion deficit cut.
China’s trade offensive is just one aspect of Trump’s multi-front struggle with all of America’s main economic partners. Imports of steel and aluminum from the European Union, Canada and Mexico have been hit by tariffs of 25% and 10% respectively since June 1.
Trump said of China’s retaliatory tariffs: “China has to take the action to make clear, it was determined to make a permanent and unfair disadvantage in the United States, this is reflected in our huge trade imbalance on commodities.” “It’s unacceptable.”
Trump is under pressure at home to take a hard line on China. The US Senate passed a measure on Monday that would overturn a deal between the trump administration and China’s ZTE to lift a ban on its sourcing of US components. It is not clear whether the measure will become law, and the government opposes it. However, it reflects growing anti-china sentiment in Washington.
“China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology,” Trump said in a statement. “Rather than altering those practices, it is now threatening US companies, workers and farmers who have done nothing wrong.”