August 6, 2018

U.S., China Further Escalate Trade Tensions

Last Wednesday, August 1, the Office of the U.S. Trade Representative issued a press release announcing President Donald Trump had directed them to consider increasing the tariff rate on $200 billion worth of Chinese imports products from 10 percent to 25 percent. U.S. Trade Representative (USTR) Robert Lighthizer explained, “The increase in the possible rate of the additional duty is intended to provide the Administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens.”

The Office of the USTR will accept comments from interested parties on the possible tariff rate increase. The timeline for submitting those comments is as follows:

  • August 13: deadline to request to appear at public hearing on the tariffs;
  • August 20-23: public hearings held; and
  • September 5: deadline for written comments and for post-hearing rebuttal comments.

The announcement did not provide any additional clarity as to the effective date of these tariffs. The implementation date could not occur any sooner than September 6, but could easily take place as soon as early September.

The Chinese government reacted to the U.S. announcement in a formal statement released Friday, arguing “China reserves the right to continue to introduce other countermeasures” and promising “any unilateral threat or blackmail will only lead to intensification of conflicts and damage to the interests of all parties.” According to CNBC, China is preparing to place tariffs ranging from five to 25 percent on a list of about $60 billion worth U.S. goods. Included in China’s list of affected products are:

  • Metals and metal products, including iron and steel (7201-7203, 7205-7212, 7214-7229, 7301-7326), copper (7402-7403, 7405-7413, 7415, 7418-7419), nickel (7501-7502, 7504-7508), aluminum (7601, 7603-7616), lead (7801, 7804 and 7806), zinc (7901, 7903-7905, 7907), tin (8001, 8003, 8007), other base metals (8101-8112), metal tools and cutlery (8201-8215), and other metal articles (8301-8311)
  • Precious metals, stones, and pearls (7101-7118)

According to American Metal Market (subscription required), China has targeted these products for 25 percent tariffs. The government didn’t indicate when the tariffs would take effect, implying that these tariffs could be imposed at any time based on U.S. actions.