4 things to watch as Trump’s tariffs hit China
The Trump White House is turning its trade war arsenal back on China.
As soon as Friday, June 15, the administration plans to release a detailed list of 25 percent tariffs worth about $50 billion that will be placed statement last month. Goods tied to Beijing’s ambitious “Made in China 2025” plan will be included.shortly after the announcement, the White House said in a
On the way back from his meeting with North Korea’s Kim Jong Un this week, Trump told Fox News he may upset China in coming weeks with trade action.
That’s a long way from May 30, when Treasury Secretary Steven Mnuchin said the. Beijing has promised to buy more American soybeans, natural gas and other exports as the two sides negotiated. But after June 3 talks between U.S. Commerce Secretary Wilbur Ross and China’s top economic official, Vice Premier Liu He, China said if the tariffs were imposed, . Chinese foreign ministry spokesman Geng Shuang on June 14.
Here’s what to look for when the list is released:
Tariffs may be more narrowly focused
“Based on comments from [Trump senior trade adviser] Peter Navarro, we expect that the list will be more finely targeted than the initial 1,300 item list,” wrote Height Capital’s Clayton Allen in a note. Items “will likely focus more directly on the tech sector in a bid to slow China’s technological advance.”
U.S. tech companies and trade groups, long critical of a number of China’s trade practices, are opposed to tariffs as a way to curb Beijing’s behavior.
“Moving forward with tariffs on goods imported from China will harm U.S. consumers and businesses, and will fail to change China’s discriminatory and damaging trade practices,” Dean Garfield, CEO of the Information Technology Industry Council (ITI), said in a statement last month.
The list might also be lower than $50 billion, and markets could react by sector, rather than as a whole, some analysts said.
“We would expect sector- and product-specific market reactions when the administration rolls out the final product tariff list — should it differ significantly from the proposed list released on April 4,” B. Riley FBR analysts including Benjamin Salisbury wrote in a note.
“The proposed list has undergone a substantial public comment period and could shrink not only in quantity, but also in overall value — an important factor in the degree of escalation should the tariffs be implemented,” Salisbury said.
The White House could delay implementing the tariffs
The Trump administration could implement the tariffs as soon as next week. But some analysts and economists also point out that under the cold-war era Sec. 301 law, the tariffs could be delayed while negotiations continue.
The White House can wait up to 30 days to implement the tariffs once published under the 301 statute, Height Capital’s Allen wrote. It can also delay another 180 days for more negotiation. That might happen if Chinese pressure arises during North Korea talks.
However, Allen noted that given recent comments from Navarro that tariffs will be more limited, Mr. Trump’s own musings that he “has to do it” and “because we have seen no concessions from the Chinese, we expect it is more likely than not that the White House will move forward with implementation relatively quickly.”
If the U.S. does move ahead with tariffs, China is ready to go with its own countermoves.
“If and when tariffs are implemented, China has already outlined its retaliation in the form of a 25 percent tariff on 106 U.S. goods worth $50 billion,” B. Riley FBR’s Salisbury wrote.
Other issues could complicate matters
By June 30, the administration plans to announce investment restrictions and “enhanced export controls” for Chinese “persons and entities related to industrially significant technology,” according to a White House statement last month.
And a bipartisan group of senators filed an amendment to the defense bill now under consideration that would prohibit the federal government from using telecom equipment or services “and that they receive no taxpayer dollars.” The move comes as the White House struck an agreement with Beijing to , including the company’s payment of a $1 billion fine.
America’s allies are also preparing for trade war
Canada, the EU and South Korea are now subject to more tariffs than the U.S.’s traditional adversaries, according to calculations from the Council on Foreign Relations. Those allies aren’t standing by idly. The EU on June 14 became the latest to solidify its countertariffs to those Trump placed on steel and aluminum that took effect in recent weeks. Mexico and have released retaliatory tariffs of their own.
There are already signs the metal tariffs, on top of those for solar panels and washing machines, aresome U.S. businesses. Some studies show a trade war, even at this stage, may , a key issue Mr. Trump used during the 2016 presidential campaign when discussing U.S. job losses.