US and China Finalize Tariffs on $16 Billion in Goods in Tit-for-Tat Escalation

By Angela Deng

In response to the US announcement on Tuesday that 25 percent tariffs on the finalized list of $16 billion of Chinese imports will go into effect on August 23, China today decided to impose the same tariff rate on an equal dollar amount of US imports. China’s retaliatory tariffs will also go into effect on August 23. In a statement released after the Office of the US Trade Representative (USTR) announcement, China’s Ministry of Commerce called the US tariffs “very unreasonable” and said that China “has no choice but to respond in order to protect its own interests and the multilateral trade system.” By August 23, the US and China will have imposed 25 percent tariffs on $50 billion worth of goods from each side.

China’s finalized list of $16 billion worth of US goods subject to retaliatory tariffs includes a total of 333 tariff lines, more than double the 114 lines included in the initial list released on June 15. In the finalized list released by China’s Finance Ministry, crude oil and some chemical products that appeared on the June draft list were removed, while motor vehicles, steel smelting byproducts, waste products, and plastics were added. The finalized list includes medical equipment and energy products such as LNG, which were also part of the initial version of the list. The finalized US list excludes 5 line items from the original 284 line items in the list released on June 15. USCBC is continuing to analyze the finalized list to identify other changes.

More tariffs from both sides are also on the horizon. The United States is currently seeking public comments on the proposed tariffs on $200 billion worth of Chinese imports, which will be implemented by the end of September at the latest. In response to the USTR announcement last Wednesday that it is considering increasing the tariff rate on the $200 billion of Chinese goods from 10 percent to 25 percent, China announced last Friday that it will seek to impose 5 to 25 percent tariffs on $60 billion of US products. In June, the president also said, "If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods." If the president’s intentions remain unchanged, then the administration could announce tariffs on this second $200 billion worth of goods either before or after China imposes its latest set of retaliatory tariffs on August 23.

If both countries fully carry out their tariff threats, a total of $450 billion of Chinese goods, nearly equal to  the total value of all Chinese exports to the United States, will be subject to US tariffs, and almost all categories of US exports to China will be hit with Chinese tariffs.

The US currently has no plans for formal talks with China to address the bilateral trade tensions, while open discussions with Chinese leaders are ongoing. Earlier this week, Senator Lindsey Graham (R-SC) said that President Trump will turn to resolving trade problems with China after NAFTA negotiations and a deal with the European Union are finished.