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US tariffs on Chinese goods come into effect

July 5, 2018

For months, talk of a trade war between the United States and China has been rampant. That talk became reality overnight when major US tariffs against Chinese goods came into effect.

China Containerhafen in Shanghai
Image: picture-alliance/dpa/W. Lei

US tariffs on a range of Chinese goods came into effect at midnight on Thursday in what could turn out to be the first fusillade in a trade war between the world's two largest export nations.

From July 6, the US government now levies tariffs of 25 percent on 818 different Chinese product lines, valued at around $34 billion (€29 billion) worth of imports. The tariffs target "industrially significant technologies" according to the Office of the United States Trade Representative, many of those related to China's 'Made in China 2025' industrial policy.

Everything from passenger vehicles to aircraft parts, computer hard drives to knitting needles are included in the wide-ranging list.

The imposition of tariffs is expected to prompt an immediate response from China, with the Chinese government expected to target US imports valued at roughly the same amount as those aimed at by the Trump administration.

'The US is opening fire on the whole world'

"The US has provoked this trade war, we do not want to fight it, but in order to safeguard the interests of the country and the people, we have no choice but to fight," Chinese commerce ministry spokesperson Gao Feng said on Thursday.

Trade dispute hits Chinese and American livelihoods

Mr Gao said the US tariffs were not so much targetting China as they were the entire global supply chain, as many of the products on the list published by the US government are made by US and international companies within China.

"On the US's so-called list of $34 billion in taxable products, about $20 billion or 59 percent of them, are made by foreign invested enterprises, with American companies representing a significant portion," he said.

Read more: EU firms worried about China's tough business environment, trade tensions

"The US's measures are essentially attacking the global supply and value chain. Simply put, the US is opening fire on the whole world, and also firing at itself."

China has vowed to respond immediately with tariffs of similar values, with more of a focus on agricultural rather than industrial products. "China will not bow in the face of threats and blackmail," added Mr Gao.

On the brink

Economists and various experts have warned for months of the risks to the global ecomony posed by a trade war between the United States and China. Christine Lagarde, head of the International Monetary Fund (IMF) said recently that a tit-for-tat cycle of retaliation would create "losers on both sides".

As tariffs loom, Chinese consumers say 'Cheerio' to American products

However, US President Donald Trump has consistently made global trade one of the central themes of his presidency, repeatedly vowing to correct what he sees as imbalances in the United States' trading relationships with several nations.

While China has consistently bore the brunt of threats on trade and tariffs, the US administration has also come into conflict recently with other major trade partners such as Germany and the wider EU, Japan, Mexico and Canada.

Trump continues to point towards strong US economic data in defence of his policies, particularly the low unemployment rate and the continuing strong performance of US stocks, and has shown little sign of backing down. Indeed, the US is currently reviewing the possible adding of more tariffs to a further 284 Chinese goods worth around $16 billion. 

Yet the warnings continue to come. This week, the US Chamber of Commerce urged Trump to reconsider his actions, saying the possibility of counter-tariffs from China could affect  $75 billion worth of US exports and endanger US jobs. 

The World Trade Organization (WTO) also spoke out strongly this week against increasing trade restrictions around the world.

aos/hg (Reuters, AFP)