Actions 'make it more difficult' to sell 'Made in America' products
U.S. President Donald Trump's decision to impose new tariffs on selected Chinese products and restrict imports will inflate consumer prices and slow global economic growth, which has benefited from the multilateral trading system, experts and officials said.
The United States on Friday announced additional tariffs of 25 percent on Chinese imports worth approximately billion, including aerospace, robotics, machinery, new materials and automobiles, destroying the consensus reached in previous talks.
To ensure its rights, China will implement an additional 25 percent tariff on 659 goods worth billion from the U.S., the Customs Tariff Commission of the State Council announced on Saturday.
Tariffs on 545 U.S. goods, valued at billion, including agricultural products, autos and aquatic goods, will take effect on July 6. Tariffs on 114 other items, including chemical products, medical equipment and energy products, will be announced at a later date, the commission said in a statement.
Wang Chen, vice-chairman of the Standing Committee of the National People's Congress, expressed the hope in Washington that the U.S. would treat China-U.S. relations from the perspective of the strategic and overall picture and properly manage sensitive issues and differences. Wang visited the U.S. from June 13 to 16 at the invitation of the U.S. Congress.
Louis Kuijs, head of Asian economics at the Oxford Economics think tank, said the economic impact of the U.S. tariffs will cause growing uncertainty and risks affecting business confidence and investment, especially cross-border investment.
"Thus, there will be an impact on growth in China, the U.S. and elsewhere, at a sensitive time for the global economy," Kuijs said.
The U.S., meanwhile, is also busy arguing with traditional allies such as the European Union, Canada and Mexico in a separate dispute over steel and aluminum.
Zhang Zhiwei, chief China economist at Deutsche Bank, said a trade war may put U.S. multinationals in danger. The current policy discussion focuses on trade, while the role of multinationals through foreign direct investment is often overlooked. Their operations in other countries help boost the U.S. economy and employment.
"The U.S. ran a trade deficit of .5 trillion against the rest of the world in 2017, but once we count in the overseas sales of these multinationals, the U.S. has a surplus of .9 trillion," Zhang said.
Zhang said U.S. multinationals accounted for one-fifth of total employment in the country. The U.S. unemployment rate is lower than its major trading partners to some extent because of the success of the U.S. multinationals. The threat of a trade war may put their success at risk.
U.S. Chamber of Commerce President and CEO Thomas J. Donohue said imposing tariffs places the cost "squarely on the shoulders" of consumers, manufacturers, farmers and ranchers in the U.S.
"This is not the right approach," Donohue said in a statement.
The U.S. National Retail Federation said the new tariffs and China's ensuing retaliatory moves threaten to erode economic gains in the U.S..
"Tax reform has increased the paychecks of American workers, encouraged U.S. companies to expand and invest in their workforces, and unleashed the strongest levels of consumer confidence in a generation. Unfortunately, these tariffs and the retaliation China has promised put all this economic progress at risk," federation President and CEO Matthew Shay said.
Kevin Brady, U.S. House Ways and Means Committee chairman, said: "These tariffs make it more difficult to sell more 'Made in America' products globally and expose many of our industries — particularly agriculture and chemicals — to devastating retaliation."
Wei Jianguo, a former vice-minister of commerce, said China's response is a precise strike and a severe blow to the U.S.. All economic and trade agreements in the areas of energy and agriculture reached in previous talks will fail to take effect due to the U.S.'s latest unilateral move, Wei said.
"China must aim at the U.S.'s weakest points to make the strike as U.S. 'fight and talk' trade policies with China will continue in the long run," he said.
"The deterioration of trade ties between the two economies will derail U.S. economic growth," Wei said. "The earlier achievements of the Trump administration in terms of employment and taxation policy will be cast away. All these factors will be beyond the U.S.'s expectations."