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Trump Threatens to Put Tariffs on Virtually All Goods Imported from China

September 8, 2018

Even as Donald Trump finalizes the approximately $200 billion worth of imported Chinese goods planned to receive tariffs this week, he also threatened to tax another $267 billion in the near future.

This week the U.S. government is scheduled to levy duties on an estimated $200 billion of goods coming from China. These include a variety of items, including consumer products such as luggage, handbags, cameras, recording devices, vacuum cleaners, and tires. The taxes on these would run from 10 to 25 percent. The final list of goods to be covered by this week’s tariffs is still being finalized.

The White House also indicated that if China showed positive signs about negotiating the trade issues between the two countries, this first wave of new tariffs might at least be postponed for a while.

These duties would go on top of an existing set of tariffs the US put in place against China several months ago. Those cover imported industrial machinery and electronics parts and some electronic subassemblies.

If negotiations do not get more serious with China, at least from the U.S. perspective, an additional $267 billion worth of imported goods might be added to the list. That would put the grand total at US $517 billion. That is even higher than the $505 billion in Chinese goods shipped into the U.S. in 2017. This means that almost everything shipped from China into the U.S. would be taxed.

The new threat was announced by Trump in public comments while on Air Force One on September 8. He said that, “The US $200 billion we are talking about could take place very soon depending on what happens with them. To a certain extent it’s going to be up to China.” He went on to comment next that, “I hate to say this, but behind that is another US $267 billion ready to go on short notice if I want. That totally changes the equation.”

One problem for the US with even the US $200 billion list of tariffs expected to go into effect this week – is that they will impact US companies which design in the U.S., manufacture in China, and then import back into the U.S. to sell. Apple Inc., for example, provided comments about the list of products covered by this set of levies, saying that a “wide range” of its products would get taxed under the current plan. While the Chinese-built iPhone would not be affected, headphones such as its popular AirPods and some of the Beats product line, plus its newly-released HomePod smart speaker would be affected.

As Apple said in its letter about the tariffs, “Our concern with these tariffs is that the U.S. will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for U.S. consumers.”

Other issues are at stake with the $200 billion of exports to be taxed now. China is expected to retaliate, this time in ways that may go beyond just tariffs on American goods coming in. Beijing is reportedly looking at actions it may take against American companies currently doing business in China.

If the $267 million of additional goods gets added to the list, even more damage to US consumers could happen. Previously ‘protected’ high-end consumer electronics such as cell phones and television would no longer be immune to tariffs. David French, a lobbyist for the National Retail Federation, an industry organization with members such as B.J.’s Wholesale Club, Macy’s and on its roster, asked that the US Government remember that, “The Chinese aren’t paying these tariffs. American families are going to pay these tariffs. These are taxes and they’re going to find their way into the pocket book of folks around the country.”

Larry Kudlow, head of the White House Economic Council, said in a recent interview that while trade discussions with China are still ongoing, China had not yet met U.S. demands. Some of those demands include, as he said, “zero tariffs, zero non-tariff barriers, zero subsidies, stop the IP theft, stop the technology transfer, [and] allow Americans to own their own companies.” He said further that, “Those have been our asks for many months and so far those asks have not been satisfied.”

Based on the lack of progress in the negotiations, if there are delays in the planned tariffs on US $200 billion of goods they will likely be more about U.S. companies asking to stay off this current list of levies rather than anything else. When the remaining $267 billion of Chinese exports to the U.S. might be added to the list of taxed goods is at this time still unknown.

Copyright: North America Procurement Council Inc., PBC