US slaps tariffs on $200bn in China goods as trade war escalates

US President Donald Trump has said he will impose 10 percent US tariffs on about $200bn worth of Chinese imports, but he spared some consumer products.

The new tariffs will take effect from September 24, Trump said in a statement on Monday. It will increase to 25 percent on January 1 unless the two countries reach a deal on trade. 

Trump also warned that if China takes retaliatory action against US farmers or industries, “we will immediately pursue phase three, which is tariffs on approximately $267bn of additional imports”.

Trump said the tariffs aim to force a change in Chinese trade policies that he said posed “a grave threat to the long-term health and prosperity of the United States economy”. 

So far, the United States has imposed tariffs on $50bn worth of Chinese products to pressure China to make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies. Beijing pushed back, slapping tariffs on $50bn worth of American goods. 

China had previously vowed to retaliate further against any new US tariffs, with state-run media arguing for an aggressive “counterattack”.

The escalation of Trump’s tariffs on China comes after talks between the world’s two largest economies to resolve their trade differences have produced no results. US Treasury Secretary Steven Mnuchin invited top Chinese officials to a new round of talks last week, but thus far nothing has been scheduled.

A senior Trump administration official told reporters that the United States was open to further talks with Beijing, but offered no immediate details on when any new meetings may occur.

“This is not an effort to constrain China, but this is an effort to work with China and say, ‘It’s time you address these unfair trade practices that we’ve identified that others have identified and that have harmed the entire trading system,'” the official said.

China’s yuan currency has weakened by about six percent against the US dollar since mid-June, offsetting the 10 percent tariff rate by a considerable margin.

Consumer tech trimmed

The US Trade Representative’s office eliminated about 300 product categories from the proposed tariff list, along with some subsets of other categories, but administration officials said the total value of the revised list would still be “approximately $200 billion”.

A broad, $23bn category of internet-connected devices will remain subject to tariffs, but some products, such as smart watches, Bluetooth devices, and other consumer-focused technology products were removed following a lengthy public vetting period during which more than 6,000 comments were received.

Apple also sent a letter earlier this month, urging the administration to shield its smartwatch and wireless headphones, which contain parts from Chinese supppliers.

Also spared from the tariffs were Chinese inputs for US-produced chemicals used in manufacturing, textiles and agriculture.

Consumer safety products made in China, such as bicycle helmets sold by Vista Outdoor and baby car seats and other products from Graco Inc also were taken off the list.

‘Tax on American families’

But the adjustments did little to appease technology and retail groups who argued that the tariffs would hit consumers hard. 

“President Trump’s decision to impose an additional $200bn is reckless and will create lasting harm to communities across the country,” said Dean Garfield, president of the Information Technology Industry Council, which represents major tech firms.

The Retail Industry Leaders Association pointed out that the new tariffs would still hit more than $1bn worth of gas grills from China, $843m worth of luggage and travel bags, $825m worth of mattresses, and $1.9bn worth of vacuum cleaners.

“Tariffs are a tax on American families, period,” said Hun Quach,” RILA’s vice president for international trade. “Consumers – not China – will bear the brunt of these tariffs and American farmers and ranchers will see the harmful effects of retaliation worsen.”

Analysts have warned that a full-scale trade war between the two could cause setbacks for global markets. 

Earlier on Monday, White House economic adviser Larry Kudlow said the United States was ready to negotiate a trade deal with China if Beijing was ready for serious discussions.

“We are ready to negotiate and talk with China any time that they are ready for serious and substantive negotiations towards free trade, to reduce tariffs and non tariff barriers, to open markets and allow the most competitive economy in the world – ours – to export more and more goods and services to China,” Kudlow said.