China is to increase retaliatory tariffs on $60bn worth of goods imported from the US from 1 June, further ratcheting up tensions between the world’s two largest economies.
The countermeasures are in response to the Trump administration raising additional tariffs on $200bn worth of Chinese goods from 10% to 25% on Friday (10 May).
The rates of additional tariffs imposed by China will now be increased to 20%-25%, from 5%-10% currently, according to a statement by the Customs Tariff Commission of the State Council. The charges will be raised on a tit-for-tat retaliation list released by the Chinese last September.
The most vulnerable US industries are in the manufacturing sector, specifically computer and electronics, as well as the liquefied natural gas (LNG) sector, ports and agriculture and related industries, according to Moody’s Investors Service.
Government officials from the two countries had appeared to be making progress on talks to end the Section 301 punitive tariffs imposed by the US over China’s acts, policies and practices on technology transfer, intellectual property and innovation.
But the US side said tensions rose ahead of the last scheduled round of talks when “China retreated from specific commitments made in previous rounds.”
For its part, China says the latest US measures “escalated trade frictions and violated the consensus reached by both sides to tackle trade disputes through consultation.”
Separately, the Trump administration on Monday (13 May) said it is moving forward on threats to impose additional tariffs of up to 25% on top of the regular rate of duty on all Chinese imports – a move that would apply to all apparel, footwear, and manufactured textile products.
“China’s hike in tariffs reinforces our view that rising US-China trade tensions will continue for a prolonged period,” Moody’s analysts say. “The escalation of tensions also signals the increased possibility of additional restrictive trade and investment measures from both sides, including US tariffs on the remaining $325 billion of imports from China that are not currently targeted.”