Trade war is on! America and China fire $34 billion tariff guns at each other

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As the United States’ tariffs on $34 billion worth of Chinese goods come into effect, China has retaliated by imposing 25 per cent tariff on 545 products from America. China’s tariffs similarly totals to $34 billion. China has also brought a suit against the U.S. over the imposed tariffs in the World Trade Organisation on Friday.

Although Chinese Premier Li Keqiang said on Friday that no one will win by fighting a trade war, China pushed to implement countermeasures against U.S. tariffs.

China’s Foreign Ministry said on July 6 that it has already begun implementing tariffs on U.S. goods in response to the 25 per cent U.S. tariffs. In describing its retaliatory move against the U.S. as the “largest-scale trade war in history”, China said it was forced to take counter-measures to defend the country’s interests.

“The duties are typical bullying behavior, which will have a serious impact on the global industrial and value chain and pose obstacles to global economic recovery,” China’s commerce ministry said.

Besides affecting “innocent” transnational companies, the tariffs will also hurt ordinary companies, global consumers, as well as U.S. enterprises and consumers, the Chinese ministry added.

President Trump said that the U.S. tariffs on Chinese goods will take effect just after midnight on Friday in Washington. He said another $16 billion of goods could follow in two weeks, suggesting that the final total could eventually reach $550 billion. This figure exceeds all of China’s annual goods exports to the U.S.

President Trump said he was confronting China’s unfair trade policies and earlier said: “From now on, we expect trading relationships to be fair and to be reciprocal.”

The President accuses China of consistently taking advantage of the American economy with practices that undermine fair and reciprocal trade.

The White House said for many years, China has pursued industrial policies and unfair trade practices—including dumping, discriminatory non-tariff barriers, forced technology transfer, over capacity, and industrial subsidies — that champion Chinese firms and make it impossible for many United States firms to compete on a level playing field.

It further claims that China’s industrial policies, such as its “Made in China 2025” plan, harm companies in the United States and around the world. And reminded trade lobbyists like the Chamber that China imposes much higher tariffs on United States exports than the United States imposes on China.

China’s average tariff rate is nearly three times higher than the average United States rate. Certain products are even more imbalanced, for instance the United States charges a 2.5 percent tariff on Chinese cars, while China currently maintains a 25 percent tariff on cars from the United States.

China has also banned imports of United States agricultural products such as poultry, cutting off America’s ranchers and farmers from a major market for their goods. It has also dumped and unfairly subsidized a range of goods for the United States market, undermining America’s domestic industry.

The Trump Administration said that in 2018 alone, it has found dumping or unfair subsidies on 13 different products, including steel wheels, cold-drawn mechanical tubing, tool chests and cabinets, forged steel fittings, aluminum foil, rubber bands, cast iron soil pipe and fittings, and large diameter welded pipe.

In January 2018, the Trump Administration found that China’s overproduction of steel and aluminum, and the resulting impact on global markets, is a circumstance that threatens to impair America’s national security.

The United States has run a trade in goods deficit with China for years, including a $375 billion deficit in 2017 alone.

The President is especially upset that the past president has promoted the interests of China at the expense of undermining American innovation and jobs. He said that it has aggressively sought to obtain technology from American companies and undermine American innovation and creativity.

His Administration also cited the cost of China’s intellectual property theft which costs United States innovators billions of dollars a year. China accounts for 87 per cent of counterfeit goods seized coming into the United States.

The United States Trade Representative’s (USTR) investigation has identified four of China’s aggressive technology policies that put 44 million American technology jobs at risk:

Trump alleges that China uses foreign ownership restrictions, administrative review, and licensing processes to force or pressure technology transfers from American companies. China requires foreign companies that access their New Energy Vehicles market to transfer core technologies and disclose development and manufacturing technology.

He said China imposes contractual restrictions on the licensing of intellectual property and technology by foreign firms into China, but does not put the same restrictions on contracts between two Chinese enterprises.

He charged that China directs and facilitates investments in and acquisitions of United States companies to generate large-scale technology transfer. And that it conducts and supports cyber intrusions into United States computer networks to gain access to valuable business information so Chinese companies can copy products.

President Trump has taken long overdue action to finally address the source of the problem by addressing China’s unfair trade practices that hurt America’s workers and its innovative industries.

In January 2018, the President announced his decision to provide safeguard relief to United States manufacturers injured by surging imports of washing machines and solar products. His Administration’s actions responded to injurious trade practices by China and other countries, including attempts to avoid legally imposed anti-dumping and countervailing duties. He reminded that following the decision, Whirlpool announced 200 new jobs in Ohio.

USTR and the U.S. Department of Commerce said that they were working together to defend the right of the United States to continue treating China as a non-market economy in anti-dumping investigations until China makes the reforms it agreed to when it joined the World Trade Organization (WTO).

President Trump’s Administration has successfully litigated WTO disputes targeting unfair trade practices and upholding Americans right to enforce United States trade laws. In February 2018, USTR won a WTO compliance challenge against China’s unfair anti-dumping and countervailing duties on United States poultry exports and China announced the termination of those duties.

President Trump had earlier imposed a 25 percent tariff on $50 billion of goods imported from China containing industrially significant technology, including those related to the “Made in China 2025” program. He said the final list of covered imports will be announced by June 15, 2018.

He added that the United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology.