China targets $3 billion of U.S. goods in tariff spat

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BEIJING (AP) — China announced a $3 billion list of U.S. goods for possible retaliation in a tariff dispute with President Donald Trump and girded Friday for a bigger battle over technology policy as financial markets sank on fears of global disruption.

The Commerce Ministry said higher duties on pork, apples, steel pipe and other goods would offset Chinese losses due to Trump’s tariff hike on steel and aluminum imports. It urged Washington to negotiate a settlement but set no deadline.

In a separate and potentially bigger dispute, the ministry criticized Trump’s decision Thursday to approve a possible tariff hike on Chinese imports worth up to $60 billion over Beijing’s technology policy. It gave no indication of a possible response but a foreign ministry spokeswoman said Beijing was “fully prepared to defend” its interests.

“We don’t want a trade war, but we are not afraid of it,” said the spokeswoman, Hua Chunying.

Financial markets sank on concern the escalating tensions might disrupt the biggest global trading relationship or lead other nations to raise import barriers.

Tokyo’s benchmark tumbled by an unusually large 5.1 percent while the Shanghai Composite Index closed down 3.4 percent.

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The dollar dipped to 104.90 yen as investors shifted into the Japanese currency, which is viewed as a “safe haven” from risk.

China’s response Friday appeared to be aimed at increasing domestic U.S. pressure on Trump by making clear which exporters, including farm areas that voted for him in 2016, might be hurt.

“Beijing is extending an olive branch and urging the U.S. to resolve trade disputes through dialogue rather than tariffs,” said economist Vishnu Varathan of Mizuho Bank in a report. “Nevertheless, the first volley of shots and retaliatory response has been set off.”

The list announced Friday was linked to Trump’s steel and aluminum tariffs , but companies already were looking ahead to a battle over complaints Beijing steals or forces companies to hand over technology.

The tensions reflect the dueling nationalistic ambitions of Trump and his Chinese counterpart, Xi Jinping.

U.S. efforts to boost exports of technology-based goods, begun under Trump’s predecessor, Barack Obama, conflict with China’s plan for state-led development of global competitors in fields from robotics to electric cars. Foreign business groups complain Chinese regulators are trying to squeeze them out of promising industries.

The Commerce Ministry announcement Friday made no mention of jetliners, soybeans or other products that are the biggest U.S. exports to China by value. That leaves Beijing room to take more drastic steps.

Chinese officials are trying to figure out how to address U.S. concerns, said Jake Parker, vice president for China operations of the U.S.-China Business Council, which represents American companies that do business with China.

“Until the Trump administration articulates those concerns and how China can address them, it’s going to be very, very difficult for China to make those changes,” said Parker.

Washington doesn’t believe it needs to give Chinese leaders another list of requests because they already know what the United States wants, said a senior U.S. official, who briefed reporters on condition he not be identified further. He said Trump and Xi agreed last year on a 100-day agenda of trade-liberalization measures but Beijing failed to act on about half of them.

Instead, the Trump administration wants Chinese leaders to address more basic structural issues that interfere with market forces, said the official.

The official cited Beijing’s “Made in China 2025” plan as “hugely problematic.” It calls for creating Chinese competitors in electric cars, robots, artificial intelligence and other fields. Business groups complain it will hamper or outright block foreign access to those industries.

The latest proposed Chinese tariffs would add a 25 percent charge on pork and aluminum scrap, mirroring Trump’s 25 percent duty on steel, according to the Commerce Ministry. A second list of goods including wine, apples, ethanol and stainless steel pipe would be charged 15 percent.

Chinese purchases of those goods last year totaled $3 billion, the ministry said.

The U.S. steel and aluminum tariffs also have irked Japan, America’s closest ally in Asia.

“We have repeatedly told the U.S. side that steel and aluminum imports from its ally Japan will not adversely affect America’s national security, and that Japan should be excluded,” said Chief Cabinet Secretary Yoshihide Suga.

China’s top economic official, Premier Li Keqiang, appealed to Washington on Tuesday to “act rationally” and said, “we don’t want to see a trade war.”

The United States buys little Chinese steel or aluminum, but analysts have said Beijing would feel obligated to take action to avoid looking weak.

Beijing reported a trade surplus of $275.8 billion with the United States last year, or two-thirds of its global total. Washington reports different figures that put the gap at a record $375.2 billion.

Trump’s technology order is in response to “unfair and harmful acquisition of U.S. technology,” said a statement by the U.S. Trade Representative’s office. It said USTR would pursue a World Trade Organization case against Beijing’s “discriminatory technology licensing.”

A USTR statement said possible measures include a 25 percent tariff on Chinese-made aerospace, computer and information technology and machinery but gave no details.

China is unlikely to respond until Washington acts but might launch an investigation of imports of U.S. corn and soybeans “as a warning shot,” said Parker. He noted Beijing began a probe of U.S. sorghum in February after Trump announced the steel and aluminum tariffs.

On Tuesday, the Chinese premier promised at a news conference Beijing will “open even wider” to imports and investment as part of efforts to make its state-dominated economy more productive.

Li said Beijing would “fully open” manufacturing, with “no mandatory requirement for technology transfers.” However, Chinese officials already insist companies aren’t required to hand over technology, so it was unclear how policy might change.

In this April 13, 2017, photo, a warehouse worker watches as government inspectors check imported frozen pork in Qingdao in eastern China’s Shandong province. China announced a list of U.S. goods including pork, apples and steel pipe on Friday, March 23, 2018, that it said may be hit with higher import duties in response to President Donald Trump’s tariff hike on steel and aluminum. (Chinatopix via AP)

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  • FrankE

    Is it really necessary for a sitting US President to instigate a full fledged Trade War with the world, while desperately trying to fend of numerous accusations of sexual misconduct. We have a President sitting in the Oval Office who has a signed NDA(non disclosure agreement) from a working porn star. He forced his entire White House Staff to sign NDA’s ( totally illegal). On top of all that we’re looking down the barrel of an all out nuclear war with N Korea.
    Do we really need to be supporting a lunatic in the White House? I for one am sick and tired of no progress, it seems the entire term so far has been one big conflict after another.
    I’m counting on the mid terms to aleviate this situation, but we never should have been forced to wait for the mid terms to get satisfaction. Am I the only one who sees the reprehensible conduct going on in the White House??????????

    • Danny Fitzsimmons

      I almost totally agree with you, However as far as China is concerned This trade war should not last long as both sides would suffer however it will bring them to the table then understanding that we are not the weakest link and why our former trade deals were giveaways to foreign countries, furthermore China has violated even their own lop sided rules by subsiding these imports as well as shifting these metals through other countries when their limit has been reached, they know we will do nothing, furthermore when technology exports to China it has to reveal all manufacturing processes and ingredients thereby allowing them to sell these secrets to companies of china which turn into knock offs back into this country and others which destroy companies here that developed the product, As well as corporate espionage from state sponsored hacking into businesses located here. The message must be clear to China We are not their rag doll any longer!