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Trade war

US-China trade war intensifies as Trump pushes 25% tariffs

New duties could take effect in September, likely sparking retaliation

Private conversations between U.S. and Chinese officials to restart trade talks are ongoing.   © Reuters

NEW YORK -- U.S. President Donald Trump fired another shot in his trade war with China this week, instructing Trade Representative Robert Lighthizer to consider raising the tariffs on a proposed list of $200 billion worth of Chinese goods to 25% from 10%, the USTR announced on Wednesday. 

"The increase in the possible rate of the additional duty is intended to provide the [U.S.] administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens," Lighthizer said in a statement.

Public hearings to consider the $200 billion list and its potential impact on interested parties have been scheduled for Aug. 20 to 23. Comments will be accepted through Sept. 5, and the new duties could be implemented as early as next month.

Trump is concerned that China has so far refused to address American complaints about unfair trade practices but has instructed his team to remain open to further discussions with Beijing, senior administration officials said. "It is clear that if those discussions are going to be fruitful, China is going to have to come to the table and really be willing to address the legitimate concerns that we have consistently raised," one official said.

Private conversations are ongoing between the two sides, but little progress has been made.

"We are in contact with our Chinese counterparts. We have been throughout this process," said the official, who noted that there was nothing to announce at this stage. "We are trying to figure out whether the conditions present themselves for a specific engagement between the two sides."

China has vowed to retaliate against any U.S. move to increase the pressure, and has already shown that is not an empty threat. When the U.S. imposed 25% tariffs on a list of $34 billion worth of Chinese products on July 6, as punishment for violations of intellectual property rights, China responded the same day with 25% duties on the same value of goods, including soybeans and cars. 

The U.S. is preparing to slap 25% tariffs on an additional $16 billion worth of Chinese products in August.

On Thursday, China's commerce ministry said it is fully prepared for these threats to escalate the trade war, and China has to fight back to defend its dignity. China expects to resolve disputes through dialogue, but equal treatment and keeping promises are prerequisites for dialogue, it said in a statement, according to Reuters.

The proposed list of $200 billion worth of Chinese goods covers almost half of U.S. imports from Asia's largest economy. The 6,000 items include consumer products, with furniture accounting for the largest sum, at about $29 billion. Networking equipment such as routers and computer parts come next. Agricultural products, processed food and leather goods are also on the list.

The U.S. is cranking up the pressure to win concessions from China. The higher tariffs are designed to damage the competitiveness of Chinese products, which has been enhanced by the depreciation of the yuan. But China has come up with economic stimulus measures in preparation of a drawn-out trade war, and shrinking imports could backfire on the U.S. economy.

For now, neither side looks willing to compromise, raising the risk that the confrontation will heat up further.

Trump's latest move hit the stocks of major exporters to China on the Tokyo market. Heavy machinery manufacturers such as KomatsuSumitomo Heavy Industries and Hitachi Construction Machinery were all down 2% on Thursday.

Nikkei staff writer Masayuki Yuda in Tokyo contributed to this report.

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