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Trade War

Trump threatens fourth round of China tariffs on $267bn in goods

Entirety of US imports now face prospect of higher duties

U.S. President Donald Trump speaks to reporters aboard Air Force One on his way to Fargo, North Dakota, on Sept. 7.   © Reuters

WASHINGTON/NEW YORK -- U.S. President Donald Trump warned China on Friday that tariffs on another $267 billion worth of products, the fourth such round of duties, await them if they do not change their trade practices.

The U.S. is soon expected to decide whether to enact its third round of additional tariffs on China, which would impact $200 billion worth of products including furniture and appliances.

Speaking to reporters on Air Force One, the president said the $200 billion third round of tariffs "could take place very soon depending on what happens with [China]. To a certain extent it's going to be up to China."

But Trump said there was more to come. "I hate to say this, but behind that is another $267 billion ready to go on short notice if I want. That changes the equation."

If all four rounds of tariffs were implemented, the combined total would hit $517 billion of imports -- roughly equivalent to all of U.S. imports from China and escalating the trade war to an unprecedented level. The U.S. imported $506 billion worth of goods from China in 2017. 

In the first two rounds of tariffs, the U.S. has imposed duties on a total of $50 billion worth of Chinese goods. Both were swiftly met with an equal retaliation by Beijing.

"This threat will be his 'all-in,' so that China comes up with a proposal that he can agree on" said Euijin Jung, a research analyst at the Peterson Institute for International Economics, of Trump's proposed tariffs on $267 billion of imports.

Trump has justified the tariffs as necessary for balancing the trade deficit with China and to bring manufacturing jobs back to the U.S. His administration is also looking to bring an end to Chinese policies that force the transfer of technology by business partners and to thwart Beijing's "Made in China 2025" initiative, which seeks to elevate China's manufacturing prowess through government subsidies and which American officials and lawmakers argue is unfair to U.S. businesses.

Earlier on Friday, White House economic adviser Larry Kudlow said Trump will not make any decisions on the $200 billion in tariffs until officials have time to evaluate public comments on them. The U.S. Trade Representative's office received nearly 6,000 comments during the public comment period on the proposed levies, which ended Thursday night.

Kudlow declined to say whether any decisions would be made on Friday.

The U.S. has proposed additional tariffs on another $200 billion in Chinese imports -- four times as much as what it has already enacted.   © Reuters

At a rally in Montana on Thursday, Trump extended his criticism of Beijing. "Honestly, we have to be treated fairly. Last year we had a trade deficit of anywhere from $375 billion," he said, adding that the situation was "unacceptable."

The proposed tariff list for $200 billion in exports has drawn opposition from a wide range of U.S. industries, from manufacturers of apparel bags and bicycles to fruit farmers. They argued that additional duties will increase costs and weigh down sales.

For example, iRobot -- the company behind the Roomba robot vacuums -- pushed against tariffs on vacuum cleaners from China. While the company admitted Chinese copycats were hurting its business, it also produces its own products in the country.

Most of the feedback was negative. Some of the comments had identical language, suggesting they were part of an organized effort against the tariffs.

The U.S. Trade Representative's office will now finalize the list for Trump's approval. It usually takes at least three weeks after the end of public comment for new tariffs to take effect, but Trump is pushing to speed up the process. He has also ordered to increase the additional duty to 25% from the initially proposed 10%.

"Politically, Trump needs a deal more (than China does)," Peterson Institute's Jung said. "Trump will want to address his achievements before the midterm elections, and the deal with China is one of them. Economically, both countries need to make a deal that removes uncertainty for Chinese and U.S. business groups involved in bilateral trade," she said.

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