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China Retaliates with August 23 Tariffs

China Retaliates with August 23 Tariffs
China's Ministry of Commerce has announced 25 percent tariffs on $16 billion in imports of goods from the U.S. starting on August 23.

The move comes after the U.S. announced 25 percent tariffs on $16 billion in Chinese goods starting the same day, a move that China's Ministry of Commerce says unreasonably puts domestic law above international law.

China will impose the tariff on 333 categories of U.S. products including vehicle engines, vans, cars, trucks and chemicals, reports China Daily. “The two countries’ trade conflict, which is merely push and shove at the moment, is likely to escalate into more than just a scuffle if the U.S. administration cannot marshal its mobster mentality,” states an editorial in China Daily. “China continues to do its utmost to avoid a trade war, but in the face of the U.S.’s ever greater demand for protection money, China has no choice but to fight back,” it said.

The U.S. imposed a 25 percent tariff on $34 billion of Chinese goods on July 6.

Shipping analyst MSI says the liner industry is awaiting the impact of the potential trade war between the U.S. and China. In MSI's view, early indications from U.S. ports and bills of lading processing suggest that June import volumes surged, perhaps suggesting panic-buying as the trade war scenario worsened. While concerns around the imposition of trade tariffs focus on the mainlane trades, their potential impact will be felt more widely.
 
“It now seems unavoidable that the U.S. and China will levy tariffs on the large part and quite possibly all of their bilateral trade flows,” says Daniel Richards, Analyst at MSI. “The largest effects will be felt on the eastbound Transpacific, but the key area to watch is how far tariffs on U.S. imports risk disrupting complex cross-border supply-chains which feed into finished products and which are especially key to the high density of regional and feeder services in the intra-Asia market.”

In February, U.S. Trade Representative Robert Lighthizer delivered President Trump’s Trade Policy Agenda and Annual Report to Congress, outlining how the Administration was promoting free, fair and reciprocal trade and strongly enforcing U.S. trade laws. “President Trump is keeping his promises to the American people on trade, from withdrawing the United States from the flawed Trans-Pacific Partnership, to renegotiating NAFTA, to strongly enforcing U.S. trade laws,” said Lighthizer. 

In January 2018, Trump exercised his authority under Section 201 of the Trade Act of 1974 to provide safeguard relief to U.S. manufacturers injured by imports of washing machines and solar panels. This was the first time Section 201 had been used to impose tariffs in 16 years. In 2017, the Administration launched a self-initiated Section 301 investigation with an in-depth probe into Chinese practices related to forced technology transfer, unfair licensing and intellectual property (IP) policies and practices. 

One of the pillars of the U.S. Trade Policy Agenda is a trade policy that supports national security policy. In December 2017, Trump announced that his Trade Policy Agenda recognizes that economic prosperity at home is necessary for American power and influence abroad. The Administration said it will work aggressively to address trade imbalances, promote fair and reciprocal trade relationships, enforce U.S. rights under existing trade agreements and work with like-minded countries to defend our common prosperity and security against economic aggression.

“Countries that are committed to market-based outcomes and that are willing to provide the United States with reciprocal opportunities in their home markets will find a true friend and ally in the Trump Administration,” the President’s Trade Policy Agenda stated. “Countries that refuse to give us reciprocal treatment or who engage in other unfair trading practices will find that we know how to defend our interests.”

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