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July 10, 2018

U.S.-China Trade Battle Officially Begins

The United States’ trade conflict marched on last week.

After threatening for months to implement tariffs on billion of dollars in Chinese products, on Friday morning the United States officially imposed penalties on more than $34 billion in products exported from China. (A list of the products is available here.) Additionally, President Donald Trump, on board Air Force One, outlined his preferred next steps, which include possible imposition of second list of 284 newly added tariff lines “in two weeks,” as well as future batches of “$200 billion” and “$300 billion.”

The Chinese government retaliated to Friday’s action almost immediately by placing a 25 percent tariff on imports of 545 American products. (That list is available here.) China’s Ministry of Commerce also announced that it had filed a second complaint to the World Trade Organization, questioning the legality of the U.S.’s Section 301 tariffs.  The announcement had no details about the nature of the complaint, but could likely parallel the complaint already filed against the U.S.’s Section 232 steel and aluminum tariffs.

The Mexican government on Friday also launched another action in retaliation for the Trump administration’s steel and aluminum tariffs. The action immediately eliminated preferential tariffs, mostly on agriculture products, established under the North American Free Trade Agreement.

Additionally, the European Commission voted last Thursday to place tariffs and quotas on steel imports from the United States. Reuters explained, “The quota would be a reflection of imports over recent years, with a 25 percent tariff set for volumes exceeding that amount …” At the same time, however, the European Union also is reportedly considering whether to end tariffs on automobiles in an effort to get President Donald Trump to reconsider his threatened tariffs on imports of cars into the United States.