Donald Trump sets 25% tariff on $50 bn of Chinese goods, faces retaliation

Plans to roll out new list of tariffs on Chinese imports worth $100 billion, if Beijing strikes back

US President Donald Trump announced hefty tariffs on $50 billion of Chinese imports on Friday as Beijing threatened to respond in kind, in a move that looks set to ignite a trade war between the world's two largest economies.

Trump, whose hardline stance on trade has led him to wrangle with allies, said in a statement that a 25 per cent tariff would be imposed on a list of strategically important imports from China. He also vowed further measures if Beijing struck back. “The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers or taking punitive actions against American exporters or American companies operating in China,” Trump stated.

Earlier, China vowed to do just that, saying it would strike back, just hours before Trump’s statement. Trump has already said the US would hit another $100 billion of Chinese imports if Beijing retaliated.

Washington and Beijing appeared increasingly headed toward a trade war after several rounds of negotiations failed to resolve US complaints over Chinese industrial policy, market access and a $375 billion trade gap. “If the United States takes unilateral, protectionist measures, harming China's interests, we will quickly react and take necessary steps to resolutely protect our fair, legitimate rights,” Chinese Foreign Ministry spokesman Geng Shuang said.

US Customs and Border Protection will begin collecting tariffs on an initial tranche of 818 product categories valued at $34 billion on July 6, the US Trade Representative's office said. The list was slimmed down, dropping Chinese flat-panel television sets and other items typically purchased by consumers, following a public comment period. The list still includes autos, including those imported by General Motors Co and Volvo, owned by China's Geely Automobile Holdings.

But USTR added a second tranche of tariffs on 284 product lines targeting semiconductors, a broad range of electronics and chemical products it said benefited from China's industrial subsidy programs, including the “Made in China 2025” plan.

Tariffs on these products will go into effect at a later date after a public comment period. A senior Trump administration official told reporters that companies will be able to apply for exclusions for Chinese imports they cannot source elsewhere.

The official said the tariffs were aimed at changing China's behavior on its technology transfer policies and massive subsidies to develop high-tech industries. The US now dominates those industries, but the Chinese government support has made it difficult for US companies to compete.

The official declined to comment on China’s recent offer to purchase an additional $70 billion worth of American farm and energy commodities and manufactured goods.

Washington has completed a second list of possible tariffs on another $100 billion in Chinese goods, in the expectation that China will respond to the initial US tariff list in kind, sources said. China has published its own list of threatened tariffs on $50 billion in US goods, including soybeans, aircraft, and autos, and has said it would hit back if Washington followed up with further measures.