Skip to main content

China proposed retaliatory tariffs on US$60-billion worth of U.S. goods ranging from liquefied natural gas (LNG) to some aircraft on Friday, as a senior Chinese diplomat cast doubt on prospects of talks with Washington to solve their bitter trade conflict.

The Trump administration tightened pressure for trade concessions from Beijing this week by proposing a higher 25 per cent tariff on US$200-billion worth of Chinese imports. China vowed to retaliate while also urging Washington to act rationally and return to talks to resolve the dispute.

The United States and China implemented tariffs on US$34-billion worth of each others’ goods in July. Washington is expected to soon implement tariffs on an additional US$16-billion of Chinese goods, which China has already announced it will match immediately.

Story continues below advertisement

China has now either imposed or proposed tariffs on US$110-billion of U.S. goods, representing the vast majority of China’s annual imports of American products. Last year, China imported about US$130-billion of U.S. goods.

China’s finance ministry unveiled new sets of additional tariffs on 5,207 goods imported from the United States, with the extra levies ranging from 5 to 25 per cent.

Timing will depend on the actions of the United States, the Chinese Commerce Ministry said in a separate statement.

“The U.S. side has repeatedly escalated the situation against the interests of both enterprises and consumers,” it said. “China has to take necessary countermeasures to defend its dignity and the interests of its people, free trade and the multilateral system.”

A top adviser to U.S. President Donald Trump said the newly proposed tariffs were not as severe as the White House had been bracing for, and he warned China not to test Mr. Trump’s resolve.

“They better not underestimate the president,” White House National Economic Council Director Larry Kudlow said in an interview on Fox Business Network. “He is going to stand tough.”

Tensions weigh on Chinese markets

The United States alleges that China steals U.S. corporate secrets and wants it to stop doing so, and is also seeking to get Beijing to abandon plans to boost its high-tech industries at America’s expense. Washington also wants China to stop subsidizing Chinese companies with cheap loans, claiming that this allows them to compete unfairly.

Story continues below advertisement

Mr. Trump has said he is determined to reduce the large U.S. trade deficit with China.

The U.S. president has accused China and others of exploiting the United States in global trade, and has demanded Beijing make a host of concessions to avoid the new duties on US$200-billion of Chinese goods, which could be imposed in the weeks after a comment period closes on Sept. 5.

Beijing says the United States is deliberately creating the trade conflict, using bullying tactics, and ignoring international negotiating norms so that it can stop the rise of China as a competitor on the world stage.

The rising tensions have weighed on Chinese stock and currency markets, with the Chinese yuan falling against the dollar.

“Instead of retaliating, China should address the long-standing concerns about its unfair trading practices,” White House spokeswoman Sarah Huckabee Sanders said in an e-mailed statement.

TOP DIPLOMATS MEET

Story continues below advertisement

The two countries have not had formal trade talks since early June.

Still, two senior diplomats met earlier on Friday on the sidelines of a regional summit in Singapore.

China is willing to resolve differences with the United States “on the basis of an equal footing and mutual respect,” China’s top diplomat said after meeting U.S. Secretary of State Mike Pompeo.

“He [Pompeo] was accommodating on this as a direction, and said that he does not want current frictions to continue,” said State Councillor Wang Yi, who is also China’s foreign minister.

Answering a reporter’s question about what was specifically said on trade, Mr. Wang said: “We did not speak in such details.”

“How can talks take place under this pressure?,” he added.

Story continues below advertisement

However, speaking to reporters at the White House, Mr. Kudlow said there had been some communication on trade “at the highest level” in recent days.

Condoms and coffee

Among U.S. products targeted in the latest Chinese salvo were a wide range of agricultural and energy products, including liquefied natural gas. LNG’s inclusion marks a deployment by Beijing of one of its last major weapons from its energy and commodities arsenal in its fight with Washington.

The market is not large by value compared with approximately US$12-billion of U.S. crude that came to China last year, but LNG imports could shoot up as Beijing forges ahead with its plan to switch millions of households to the fuel, away from coal.

Morgan Stanley has estimated annual Chinese imports of U.S. LNG could rise to as much as US$9-billion within two or three years, from US$1-billion in 2017. The amount could be even larger if the United States resolves a logistics bottleneck.

“As the total value of goods under tariffs shoots up, China has little choice but to use LNG and others to top up the value,” said Lin Boqiang, professor on energy studies at China’s Xiamen University.

“The U.S. gas industry will be much harder hit by this as China imports only a small volume, whereas U.S. suppliers see China as a major future market.”

Other U.S. goods targeted by China in the latest list include semiconductors, some helicopters, small-to-mid-sized aircraft, condoms, iron ore, steel products, roasted coffee, sugar, foods containing chocolate, candies, and even car windscreens.

The United States was the fourth-largest supplier of foreign chocolate products to China in 2017, worth around US$24-million, after Italy, Russia and Belgium, according to customs data. China’s growing sweet tooth is seen as a big sales opportunity for international makers of cookies and chocolate bars like Mars Inc. and The Hershey Company.

Small- and medium-sized planes were on the list of goods that would be slapped with an additional 5 per cent tariff. Helicopters with an empty weight of less than 2 tonnes were also on that list.

China’s biggest U.S. imports by value in 2017 were aircraft and related equipment, soybeans and autos.

Report an error
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter