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Trade war

China to impose new tariffs on $60bn of US imports

Trade spat escalates as cycle of retaliation continues

China said its latest tariffs on U.S. goods are rational and restrained.    © Reuters

BEIJING -- China said on Friday it will impose tariffs of up to 25% on $60 billion worth of imports from the U.S., citing a threat by Washington to further hike its own duties.

The Chinese Commerce Ministry's proposed four-tiered system would levy additional duties of between 5% and 25% on 5,207 items, with the top rate applying to such products as liquefied natural gas, sugar, electric razors and microwave ovens. It said the differential tax rate countermeasures are "rational and restrained."

Washington has "escalated the situation without regard for the interests of either businesses or consumers" and Beijing "must take the necessary measures to counteract it," the Commerce Ministry said. "Any unilateral threat or blackmail will only lead to intensification of conflicts and damage to the interests of all parties," it said.

U.S. President Donald Trump on Wednesday directed the U.S. trade representative to consider raising tariffs on $200 billion in Chinese goods to 25% from 10%. Beijing said the new tariffs will take effect if that hike is implemented.

Yet, China cannot continue its tactic of mirroring the U.S. duties, as its annual imports from the U.S. total just $130 billion. The $60 billion proposal seem to indicate that Beijing is running low on options to hit back.

Meanwhile, Ryan Hass, a fellow at the Brookings Institution and former director for China, Taiwan and Mongolia at the National Security Council, said "while China does not have the option to match the American tariffs dollar for dollar, in relative terms, China's tariffs cover a higher proportion of imports."

The new $60 billion worth of goods subject to tariffs, added to the previously announced $50 billion of goods, account for almost all of China's $130 billion in imports from the U.S., Hass said. Trump's proposed $250 billion worth of goods cover just half of the roughly $500 billion that the U.S. imported from China in 2017. 

"Both sides are trying to intimidate each other into moderation," Hass said. "But the challenge is that both sides see no incentive to compromise."

U.S. Secretary of State Mike Pompeo and Chinese counterpart Wang Yi met on Friday before Beijing's announcement on the sidelines of the ASEAN Regional Forum in Singapore. In a news conference, Wang urged continued dialogue to deal with the intensifying trade tensions. But Washington and Beijing have not held official high-level talks on the issue since early June.

White House economic adviser Larry Kudlow said on Friday that China should not doubt U.S. President Donald Trump's resolve to act on trade. "They better not underestimate the president," Kudlow told Fox Business Network in an interview after China announced the new tariffs.

The Trump administration on July 6 imposed 25% tariffs on $34 billion in Chinese products. China promptly retaliated with its own duties on the same scale and rate. The U.S. is expected to levy another round of tariffs on $16 billion in imports soon.

Nikkei staff writers Oki Nagai in Singapore and Ken Moriyasu in New York contributed to this report.

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