US Industry Criticizes Chinese Retaliatory Tariffs

U.S. industry representatives criticized China’s Aug. 23 decision to impose retaliatory tariffs on the U.S. and called for the two sides to quickly reach a trade deal. The latest Chinese tariffs could lock U.S. companies out of China for “many years,” said Doug Barry, spokesman for the U.S.-China Business Council. Barry said U.S. companies are worried that China is finding other suppliers as the trade war continues, and the latest measures may only speed up the process. “More worrisome is the signal to everyone, everywhere, that the trade conflict is getting worse, not better,” Barry said. “So let’s not invest and let’s not buy.”

The council urged the U.S. and China to return to the negotiating table “without preconditions and with flexible positions” as soon as possible. Otherwise, the trade will continue to be “a vicious cycle caused by uncertainty and perceived risk,” Barry said.

The U.S. Chamber of Commerce said China’s announcement was “unfortunate but not unexpected” and also urged the Trump administration to quickly sign an agreement. “The fact of the matter is that nobody wins a trade war, and the continued tit-for-tat escalation between the U.S. and China is putting significant strain on the U.S. economy, raising costs, undermining investment, and roiling markets,” Myron Brilliant, the chamber’s executive vice president, said in a statement.

The tariffs, which China will impose on about $75 billion worth of U.S. goods in retaliation for the coming 10 percent Section 301 tariffs on $300 billion in Chinese goods, will come in two separate batches. China said it will impose either 10 percent or 5 percent tariffs on more than 5,000 U.S. products on Sep. 1 and Dec. 15.

China also said it is imposing 25 percent tariffs on cars, as well as 5 percent tariffs on auto parts, beginning Dec. 15. China had announced it would temporarily suspend those additional tariffs as of Jan. 1 as a gesture of good faith in negotiations with the U.S., and had extended the suspension on April 1.

China also released annexes listing more than 5,000 U.S. products that will be impacted by the tariffs and specified which tariffs will be applied to certain items.

The first annex details tariffs that will take effect Sept. 1. Effective that day, 10 percent tariffs will begin for a list of goods largely made of fish and fishery products of chapter 3, as well as fruits and nuts of chapter 8.

A second set of 10 percent tariffs will also take effect Sept. 1 that covers goods found throughout the tariff schedule, though again well over half of the covered tariff lines are agricultural products. These include meat of chapter 2, animal products of chapter 5, vegetables of chapter 7, cereals of chapter 10, milled goods of chapter 11, oil seeds and miscellaneous grains of chapter 12, animal and vegetable fats and oils of chapter 15, and fruit and vegetable preparations of chapter 20.

Also on Sept. 1, a 5 percent tariff will take effect mainly for certain agricultural goods of chapters 4-7, as well as a second list of goods subject to 5 percent tariffs on live animals of chapter 1, live plants of chapter 6, food preparations, earths and stone of chapter 25, inorganic chemicals of chapter 28, pharmaceuticals of chapter 30, fertilizers of chapter 31, dyes and paints of chapter 32, plastics of chapter 39 and rubbers of chapter 40, among other goods.

A second list covers tariffs that are set to take effect Dec. 15. On that date, 10 percent tariffs will begin on a list of goods that includes coffee and tea of chapter 9, meat preparations of chapter 16, fruit and vegetable preparations of chapter 20, organic chemicals of chapter 29, wood products of chapter 44, various stones, ceramics and metals of chapters 67-83, and machinery of chapters 84 and 85, among other products. A second set of 10 percent tariffs that also begin Dec. 15 will largely cover vehicles of chapter 87.

Also on Dec. 15, 5 percent tariffs will take effect on goods found throughout the tariff schedule, with a particular emphasis on inorganic chemicals, fibers and textiles, machinery and instruments of chapter 90. A second set of 5 percent tariffs will on that date apply largely to wood products, paper and books, fibers, textiles and apparel, masonry and metals, machinery, vehicles, and other goods found in chapters 90-97.

“China’s adoption of tariff-adding measures is a forced move to deal with U.S. unilateralism and trade protectionism,” China’s State Council said, according to an unofficial translation. “The Chinese side once again reiterated that for China and the United States, cooperation is the only correct choice, and a win-win situation can lead to a better future.”

China also mentioned an exclusion process will be announced at a later date but did not give specifics.

The Chinese tariffs are believed to target U.S. agricultural products, especially soybeans, according to an Aug. 23 post from Dezan Shira & Associates. China may have a “stronger hand” than the U.S. because it has recently been sourcing from “substantial agricultural supply bases” in Africa and South America as well as member countries of the Association of Southeast Asian Nations, the post said.

“Beijing has prepared itself for the eventuality of a trade war, and has been busy making alternative supply arrangements should this eventuality arrive,” the post said. “Will US manufacturers and farmers ever get China back as a customer now that Beijing is in the process of buying from different suppliers –-- and ones considerably closer to home?”