The Chinese government has announced about $3 billion in tariffs on U.S. imports to the country in response to U.S. tariffs on steel and aluminum imports from China, as well as other nations, last month. The Chinese tariffs will be on 128 U.S. products ranging from fruit to meat to steal pipes. The majority of the goods will be subject to a 15% tariff, but some, like steel pipes, will be subject to a 25% tariff.
China’s countermeasures sparked fresh fears of a trade war. The Dow Jones Industrial Average closed nearly 500 points, or 2%, down from its previous close on the news. The index has been on a roller coaster ride over the last month, reacting to alternating news of heightening and diminishing tensions between the two nations. The Dow is down about 3,000 points from the record highs reached in late January.
The U.S. Commerce Department found earlier this year that rising imports of steel and aluminum threatened U.S. national security. President Trump, to the consternation of some senior administration officials, announced 25% and 15% steel and aluminum tariffs respectively. “If you don’t have steel, you don’t have a country,” he said when making the announcement.
He would later exempt U.S. allies like Australia, Brazil and South Korea, as well as the entire European Union, from the tariffs. (He had previously exempted Canada and Mexico.) China, however, was not exempted.
He would subsequently announce an additional $50 billion on Chinese-made goods and would ask China to reduce the trade deficit with America by $100 billion. It’s “the largest deficit of any country in the history of our world,” he said, adding, “It’s out of control.” The Trump administration did not disclose which products or industries tariffs would be leveled on, but assured the list would be “long.”
The Chinese stood their ground. “China is not afraid of and will not recoil from a trade war,” China’s embassy in Washington said a statement after the $50 billion in tariffs were announced. “China would fight to the end to defend its own legitimate interests with all necessary measures,” it added.
The U.S. tariffs against China were aimed at intellectual property theft and violations of technology transfer agreements that have served as disadvantages for U.S. companies and disagreements in trade. Critics have long complained of China’s trade policies.
Fears of a trade war subsided briefly last week when it was revealed that Treasury Secretary Steve Mnuchin and his Chinese counterpart Liu He were holding a series of secret of talks aimed at ratcheting down the friction between the two nations. Liu told Mnuchin during one conversation that he remained hopeful the two nations could “maintain the overall stability of their economic and trade relations.”
But in a statement today the White House accused China of acting inequitably. “Instead of targeting fairly traded US exports, China needs to stop its unfair trading practices which are harming US national security and distorting global markets,” spokeswoman Lindsay Walters said.
President Trump has largely said his goal is to bring trade polices foreign countries have with the U.S. a little more into balance. “The word is “reciprocal,”’ the President said at yesterday’s event. “That’s the word I want everyone to remember. We want reciprocal…If they charge us, we charge them the same thing. That’s the way it’s got to be. That’s not the way it is. For many, many years — for many decades, it has not been that way,” he’s said.