Two of the World’s largest economies dove deeper into a trade war post Beijing’s move on including US$ 60 billion of products from the United States in its import tariff list. This was in retaliation for President Trump’s planned charges on Chinese goods worth US$ 200 billion. Tariffs on Chinese products would begin from 10 percent and increase to 20 percent by 2019.
Partly relying on Section 301 of the Trade Act of 1974, the United States administration accused China of adopting predatory practices and theft of intellectual property and overtake US’s technological supremacy. This gave a push to the U.S. administration to impose penalties and fines on China, with the latter accused of harming business interests of the United States.
In response to this accusation, China will impose levies on more than 5,000 U.S. products, from natural gas to aircrafts along with frozen vegetables and cocoa powder. Levies will range from five to 10 percent, in place of previously planned rates of five percent, 10 percent, 20 percent and 25 percent. Tariffs from both countries would come into force on 24th September 2018.
By far, the United States has levied tariffs on Chinese products worth US$ 50 billion in a bid to pressurize the latter forcing it to make vivid changes to its technology transfer, high tech industrial subsidy and trade policies. Beijing retaliated softly, however, American businesses are more concerned about the repercussions if Beijing resorts to severe measures including pressurizing U.S companies in China.
Products such as Apple smart watches and other electronic gadgets are still not subject to new tariffs originating from the ongoing trade war which, in a way is favorable to Apple’s interests. However, if the United States administration levies additional tariffs, the current immunity enjoyed by Apple and its competitors may not sustain.
Trump administration also accused China of targeting rural supporters who voted Trump’s presidency by hitting agricultural products. Meanwhile, Beijing suggested that rural farmers would not support Trump in case their incomes got impacted by the on-going US trade levies. Trump administration cautioned China that if it initiates a retaliatory action on U.S. industries or farmers, U.S. would pursue the third phase that includes tariffs on around US$ 267 billion of surplus imports. In light of the current situation, China has been reviewing its plans for new talks with Washington, according to South China Morning Post.
According to European Union trade chief, tensions related to trade tariffs between the two economies should be routed and resolved through World Trade Organization (WTO). Echoing one of President Trump’s phrases that trade war are easy to win, the European trade commissioner exclaimed that this escalation of tariffs and the overall situation being unfortunate it must be resolved by WTO.