China has started imposing retaliatory tariffs on U.S. products. The Chinese government has pushed ahead of its plan to increase the duties on various American goods exported to the country.
On Sunday, China implemented its additional tariffs on some U.S. goods based on its $75-billion target list. Tariffs between 5% and 10% were added to 1,717 items out of 5,798 products that have originated from the United States. This is only about one-third of the items included in the list.
Items such as vodka, toothpaste, oatmeal, raisins, nuts, and citrus products were subjected to a 10% tariff last Sunday. A 5% tariff increase was imposed on products such as coffee beans, gases, live orchids, pigs, and Pneumatic rubber tires.
For the first time since the trade war between two of the biggest economies in the world started more than a year ago, crude oil from the United States has been imposed with a 5% tariff.
On December 15, the majority of American goods exported to China will be levied with tariffs. China will also be reinstating tariffs on U.S. automobile and automobile parts by that time.
In the United States, a portion of President Donald Trump’s tariffs on Chinese goods also took effect last September 1. By December 15, it is expected that all $550 billion worth of Chinese products exported to the U.S. will be subjected to duties.
As the Chinese economy faces a growth slowdown and the pressure of the U.S. tariffs to its economy continues, Beijing is trying to boost domestic morale. China is now trying to move its reliance from manufacturing and exports to consumption.
“The big stick of tariffs can’t hold back China‘s development,” read the headline of a September 1 article printed on the Chinese Communist Party newspaper, People’s Daily.
Analysts have reported that China’s best option amid the trade war with the United States is to wait it out. This comes after the massive increase in its domestic economy due to local consumption.
With China’s economy, external trade only makes up a small portion and it’s only about 20% of the country’s gross domestic product.
“The (Chinese) government is trying to buy time in terms of using the window to restructure the domestic economy … the domestic corporate sector. And the majority of that is actually not to the U.S., so China can afford to play the long game and play it well,” said Value Partners investment director Chung Man Wing.
Despite China’s efforts to minimize the impact of the tariffs on its economy, it has called for the cancellation of all additional tariffs as part of a trade agreement with the United States.
There have been reports of a meeting between the U.S. and China in Washington this September. However, officials from both parties have yet to agree on a schedule. This does not necessarily mean that the meeting won’t be happening.
On September 2, China has filed a complaint against the United States at the World Trade Organization (WTO) over import duties.
“The tariffs imposed by the United States severely violated the consensus reached by the two heads of state in Osaka,” said the Chinese Commerce Ministry in a statement reported by the Xinhua News Agency.
The current lawsuit is the third one lodged by Beijing against Trump’s tariffs on Chinese goods at the World Trade Organization (WTO).
“China will firmly safeguard its own legitimate rights and interests and resolutely uphold the multilateral trading system as well as the international trade order,” adds the Chinese Commerce Ministry.
In its response to the first of the three legal cases that China has filed against the United States, the latter said: “China has taken the unilateral decision to adopt aggressive industrial policy measures to steal or otherwise unfairly acquire the technology of its trading partners; the United States has adopted tariff measures to try to obtain the elimination of China’s unfair and distortive technology-transfer policies.”
Based on the rules of the World Trade Organization, Washington is given 60 days to try to settle the latest dispute with China. If this fails, China can ask the organization to step in and give its decision over the matter.