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US raises tariffs on Chinese goods

May 10, 2019

Washington has increased tariffs on Chinese imports as trade talks broke up without an apparent agreement. Donald Trump said there was "no need to rush" a deal. China signaled that it would take countermeasures.

Signs with the US flag and Chinese flag are seen at the Qingdao free trade port area in Qingdao in China's eastern Shandong province
Image: Getty Images/AFP/STR

Representatives of the US and China ended their talks on Friday without sharing details on the results, with US Treasury Secretary Steven Mnuchin describing the meeting only as "constructive."

China's vice premier, Liu He, said the talks went "fairly well," according to Bloomberg. 

Hu Xijin, editor-in-chief of the Chinese newspaper Global Times, cited "an authoritative source" to report that "talks didn't break down. Both sides think that the talks are constructive and will continue consultations. The two sides agree to meet again in Beijing in the future."

The talks were burdened by US President Donald Trump's announcement that he would hike up  tariffs on $200 billion (€178 billion) of Chinese goods entering the United States.

The measure took effect on Friday, but US authorities said it would not apply to goods that had already left China's ports. Shipping goods from China to the US takes three to four weeks, so the caveat gives the negotiators extra time to overcome the crisis.

Meanwhile, Trump wrote on Twitter that talks with Beijing were continuing "in a very congenial manner - there is absolutely no need to rush - as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products."

Consumer products — including cellphones, computers, clothing and toys — are especially targeted by the tariff rate increases, from 10% to 25%. 

China's Commerce Ministry expressed its "deep regret" and warned that Beijing will not "capitulate to any pressure." Without elaborating, it threatened to take "necessary countermeasures."

Tension between the countries has increased after the White House accused Beijing of watering down commitments to trade reform — a claim strongly rejected by China. 

Money for farmers

US Agriculture Secretary Sonny Perdue said Trump had asked him to come up with a plan to help farmers to cope with the consequences of the trade war. The standoff has hit US soybean farmers particularly hard, with shipments to China dropping to a 16-year low in 2018. This week's prices of the crop are the lowest in over a decade.

The Department of Agriculture did not provide details on the plan. It is believed that it would be implemented as a second round of assistance for farmers after the authorities gave out $12 billion to compensate for lost sales and dropping prices.

On Twitter, Trump said the US would use the income from tariffs to buy "agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance."

Talks continue

Vice Premier Liu and US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday. Officials did not speak to reporters as they left, but, following the talks, Trump held a meeting with Lighthizer and Mnuchin.

Liu told Chinese state television that he had come to the talks "with sincerity" but the meeting had "run into some problems."

Negotiations to rescue a trade deal continued on Friday, with the editor-in-chief of China's Global Times, Hu, saying they would continue in Beijing at an unspecified date.

Trump announced the tariff hike on Sunday, expressing frustration with the pace of the talks. 

Though Trump said a trade deal was still possible — adding that he had received a "very beautiful" letter from Chinese President Xi Jinping — he repeated his warning.

"I am different than a lot of people," Trump said. "I happen to think that tariffs, for our country, are very powerful."

Read more: China records slowest growth rate in nearly 30 years

Markets rattled

The possibility of an escalation in the dispute has rattled stock markets around the world.

Read more: Trump's China threat is about more than just trade

Philip Wee, of the Singapore-based DBS Bank, warned in a report that a tariff hike and a breakdown in talks meant that "risks of a financial market collapse, extreme risk aversion and sharp slowdown in global growth will spike."

Washington has demanded significant reforms to the Chinese economy, such as subjecting state enterprises to market principles, a reduction of massive subsidies and curbing the alleged theft of US intellectual property.

rc,dj/jm (AFP, AP, Reuters)

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