BEIJING (BLOOMBERG) - China confirmed that it will impose 25 per cent tariffs on an additional US$16 billion (S$21.8 billion) worth of imports from the US from Aug 23, matching an earlier move from Washington in another ratchet higher for the trade war between the two nations.
The US decision to levy 25 per cent tariffs on the same value of Chinese goods is “very unreasonable,” and China will have to retaliate to protect its rightful interests and the multilateral trading system, China’s Ministry of Commerce said in a statement.
The tit-for-tat protectionist measures are poised to surge even higher, with the US reviewing 10 per cent duties on a further US$200 billion in Chinese imports that it may even raise to 25 per cent after a comment period ends on Sept 6.
Should the US proceed with those tariffs, China’s ready to slap duties on an additional US$60 billion of American goods.
“We’re not yet past the point of no return but we’re edging closer to it,” said Wang Tao, head of China economic research at UBS AG in Hong Kong.
“The risk is that the US administration’s gamble to strong-arm China into giving into all US demands without some compromise only leads to successive rounds of higher and higher tariffs.”
President Donald Trump has suggested he may tax effectively all imports of Chinese goods, which reached more than US$500 billion last year.
Reserve Bank of Australia Governor Philip Lowe on Wednesday warned that escalation of the dispute could be “very damaging for the world economy.”
China’s exports grew faster than expected in July, while imports surged, showing both domestic and international demand continue for now to shrug off the uncertainty of the trade conflict with the US.
The world’s largest exporter, China is still benefiting from robust global demand even as increasing tensions and rising trade barriers with the US weigh on the outlook.
The revised Chinese list released today added hundreds of new items to be hit with tariffs, and now covers items as diverse as coal, medical instruments, waste products, cars and buses.
The tariffs will come into effect simultaneously with the US ones, at 12.01pm in Beijing, according to the statements.
The US announced earlier this week that its own tariffs on US$16 billion of Chinese goods would start on Aug.23.
US Customs will begin collecting duties on 279 product lines ranging from motorcycles to steam turbines and railway cars, the US Trade Representative’s Office said in an emailed statement on Tuesday.
The US had already levied 25 per cent duties on US$34 billion in Chinese goods on July 6, prompting swift in-kind retaliation from Beijing.
At the weekend, Trump said he had the upper hand in the trade war, while Beijing responded through state media by saying it was ready to endure the economic fallout.
A US-China trade war will reduce global output by 0.7 per cent by 2020, with China’s economy taking a 1.3 per cent hit and US GDP dropping 1 per cent, Oxford Economics said in a research note on Tuesday, before the new list was released.
While there’s no major risk of the world lapsing into “damaging stagflation,” the possibility remains of a “bigger blow-up” that sharply reduces trade, as in the 1930s, it said.