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Trade tensions

China cries foul and imposes its own 25% levy on US goods

Beijing sees Washington as 'flip-flopping' on trade stance

Chinese President Xi Jinping and U.S. President Donald Trump. There is growing distrust in Beijing over the U.S. on trade issues.   © Reuters

BEIJING -- China retaliated Friday after the U.S. placed 25% import tariffs on its goods in what Beijing sees as the administration of Donald Trump reneging on its promise to hold off on such action.

In response to the U.S. decision to impose a 25% levy on $50 billion of Chinese imports, China on Friday said it will immediately implement additional tariffs "of the same scale and intensity" on American products.

The official Xinhua news agency, citing the Tariff Commission of the State Council, reported on Saturday that China will impose an additional 25% duty on 659 U.S. goods worth $50 billion. Tariffs on $34 billion of goods including autos, agricultural products and aquatic products will take effect from July 6, with additional goods to be announced at a later date, Xinhua said.  

The U.S. move "not only hurts bilateral interests, but also undermines world trade order," Chinese Foreign Ministry spokesperson Lu Kang said in a statement. "China doesn't want a trade war" but has no choice but to fight back forcefully against "short-sighted" actions, he added.

Back in April, China said it would impose an additional 25% tariff on $50 billion of U.S. products like soy beans, beef, aircraft and automobiles if Washington went ahead with its plans. Beijing will also scrap its plans to boost imports of American products.

China is wary of flip-flopping by the U.S.. The two sides had agreed to hold off on new tariffs in their second round of trade talks in Washington in May, and both U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He signaled a truce in front of TV cameras.

But Donald Trump, worried about appearing weak on China, reversed that position later that month. A White House statement issued May 29 said the U.S. would announce the final list of imports to be affected by the new tariffs by June 15.

The two sides still met for a third round of talks in early June, when China agreed to import an additional $7 billion in American agricultural and energy products. Liu also entertained U.S. commerce Secretary Wilbur Ross at the Diaoyutai State Guesthouse, signaling a softer Chinese stance. The U.S., meanwhile, agreed to reconsider its ban on American companies selling parts to Chinese telecommunications equipment maker ZTE.

The countries attempted to hold another meeting this week, but were unable to do so.

"We have two options," Chinese Foreign Minister Wang Yi said Thursday after a meeting with U.S. Secretary of State Mike Pompeo, arguing the countries could choose cooperation and a win-win outcome or confrontation and a lose-lose scenario. But his calls appear to have fallen on deaf ears.

Trump had previously avoided antagonizing Beijing too far, since he was eager for Chinese President Xi Jinping's cooperation on denuclearizing North Korea. But Trump now has a direct line of communication to North Korean leader Kim Jong Un following their Tuesday summit.

The two countries could continue imposing higher and higher tariffs on each other, which would greatly squeeze bilateral trade. The tensions could impact investment and human exchanges as well. The U.S. Treasury is preparing a bill that would limit investment in the U.S. by Chinese companies, and Washington has already shortened the length of visas for Chinese graduate students in high-tech fields.

 

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