By Andrew Mayeda and Jenny LeonardThe US and China moved to the brink of a trade war on Friday after the Trump administration announced tariffs on Chinese imports would take effect in three weeks and pledged additional investment restrictions, prompting an immediate vow of retaliation from Beijing.The worlds No.
2 economy will impose tariffs with the same scale and intensity on imports from the United States , and all of Chinas earlier trade commitments are now off the table, according to government statements.
United States goods slated for levies include farm products such as soybeans, a potential blow to rural states that backed President Donald Trumps election in 2016.Trump on Friday pledged more tariffs if China follows through on the retaliation threats, without specifying an amount.
In April, he asked officials to consider an additional $100 billion in levies.
Meanwhile, United States Trade Representative Robert Lighthizer said an announcement on United States investment restrictions on China will follow in the next two weeks.Full USTR Statement on Tariffs on Chinese ProductsOur hope is that it doesnt lead to a rash reaction from China, Lighthizer said in an interview on Fox Business Network on Friday.
We hope that this leads to further negotiations and we hope it leads to China changing its policies, at least with respect to us, and opening up their market.The first wave of 25 percent tariffs will hit $34 billion in goods and take effect July 6, with another $16 billion still to be reviewed, the United States Trade Representative said in a separate statement.The USTRs final list includes 1,102 product lines, down from about 1,300 initially, mainly focused on Chinas Made In 2025 plan to become dominant in high-technology industries such as robotics, aerospace, industrial machinery and automobiles.
Consumer goods including mobile phones and televisions arent being hit with the tariffs.Hours later -- early Saturday in China -- the nations Finance Ministry issued a list of 545 product categories, also covering about $34 billion in exports from the United States , to be subject to an additional 25 percent tariff starting July 6.
They included a variety of agricultural products, including soybeans, corn and wheat along with beef, pork and poultry, plus automobiles.
A second set of tariffs to begin at a later date spanned other goods including coal, crude oil, gasoline and medical equipment.It is deeply regrettable that in disregard of the consensus between the two sides, the United States has demonstrated flip-flops and ignited a trade war, said Lu Kang, a spokesman for Chinas Ministry of Foreign Affairs, according to the official Xinhua news agency.
This move not only hurts bilateral interests, but also undermines world trade order.
The Chinese side firmly opposes that.Trump defended his decision on Friday, saying the United States requires a fairer trade relationship with China as he played up his personal friendship with Chinese President Xi Jinping.Look, hes my friend, President Xi.
Hes a great man, hes a wonderful guy, but at some point we have to straighten it out, Trump said in an interview on Fox News.
So much of our secrets -- you know, we have the great brainpower in Silicon Valley.
And China and others steal those secrets, and were going to protect those secrets.
Those are crown jewels for this country.United States and European stocks fell and bonds gained on the news.Imposing tariffs places the cost of Chinas unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers, and ranchers.
This is not the right approach, Thomas Donohue, president of the United States Chamber of Commerce, said in a statement.The United States imported $506 billion of goods from China last year and exported about $130 billion, leaving a 2017 deficit of $376 billion, according to government figures.Technology RaceThe White House move is a response to the USTRs Section 301 investigation earlier this year that accused China of stealing United States intellectual property in an effort to dominate the development of advanced technology.Trump is shaking up the world economic order with his zeal for tariffs and embrace of trade conflict.
He threw a meeting of the Group of Seven into turmoil by revoking support for the groups joint statement and berating the summits host, Canadian Prime Minister Justin Trudeau.Before Friday, the Trump administration had imposed tariffs on steel and aluminum imports, along with solar panels and washing machines.
Economists expect the direct impact on the United States economy to be modest.
But if the president follows through on all the duties hes threatened, including the tariffs against China, United States inflation could accelerate by 15 basis points, according to Goldman Sachs Group Inc.Trumps tariffs may also influence his efforts to bring peace to the Korean peninsula following his summit with leader Kim Jong Un this week in Singapore.
Beijing is an important player in talks with North Korea on abandoning its nuclear-weapons program.Its FoolishWang Huiyao, director of the Beijing-based Center for China and Globalization and an adviser to Chinas cabinet, said Trumps measures will damage United States -China cooperation over North Korea.Its foolish on the part of the Trump team, he said.
He needs Chinas collaboration on North Korea and he gives the impression that hes burning the bridge after crossing the river.Trump had appeared to be taking a more conciliatory approach with China before Friday.
His top economic advisers had held weeks of high-level negotiations to ease tensions, with China offering to boost purchases of American goods by $25 billion.Also, the president earlier this month decided to soften a penalty on Chinese telecom-equipment maker ZTE Corp, resisting opposition from Congress.In April, the United States banned ZTE from buying American technology for seven years, effectively putting the company out of business.
But Trump said this month ZTE could avoid the ban if it paid at least $1 billion in penalties, among other things.
United States senators are seeking ways to block the deal in Congress.
With assistance by Katherine Greifeld, Peter Martin, Yinan Zhao, and Zhe Huang