US threatens raising tariffs to 25% on $200 billion of Chinese goods

The Trump administration is considering increasing the rate of proposed tariffs to 25% on an additional $200...

Posted: Aug 2, 2018 12:36 PM
Updated: Aug 2, 2018 12:36 PM

The Trump administration is considering increasing the rate of proposed tariffs to 25% on an additional $200 billion worth of goods from China.

The White House had previously asked the Office of the United States Trade Representative about the possibility of imposing a 10% tariff on $200 billion worth of Chinese goods. But under a new plan the tariffs would more than double in size.

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Talks between the world's two largest economies are at an impasse in the trade spat, with both sides continuing to threaten new tariffs.

The United States has already slapped 25% tariffs on Chinese goods worth $34 billion to punish Beijing for what it says are its unfair trade practices, such as forcing American companies to hand over valuable technology. China immediately responded with equal measures.

In the latest step, President Donald Trump has directed US Trade Representative Robert Lighthizer to consider increasing the proposed tariff level on fruit and vegetables, handbags, refrigerators, and more. The trade office has extended its previous deadline of Aug. 30 to allow the public more time to comment on the new plan. Those comments are now due on Sept. 5.

"The increase in the possible rate of the additional duty is intended to provide the administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens," Lighthizer said in a statement.

The Information Technology Industry Council, which represents major IT users like Google, Facebook and Microsoft (MSFT), immediately called the move by the administration "irresponsible, counterproductive," and said it would "only do more harm to Americans across the country."

Related: China cuts taxes to protect its economy from the trade war

"American consumers and businesses are now feeling the pinch of increased costs," said Jose Castaneda, a spokesman for the council, in a statement. "Instead of escalating this trade war, the president should have serious negotiations with the Chinese to create lasting change."

China's Foreign Ministry spokesperson Geng Shuang, when asked about the possible rate increase earlier on Wednesday, said China was standing its ground in the trade dispute.

"China's position is firm and clear cut," Shuang told media at a regular press briefing in Beijing. "It remains unchanged. The blackmailing and pressure by the US will never work on China if the US take measures to further escalate the situation we will surely take countermeasures to firmly uphold our legitimate rights and interests."

Conversations between the two sides have stalled in recent weeks but a senior administration official told reporters on a call about the tariff rate hike that the United States "remains open to further discussions" with China.

Related: US-China trade war may raise gadget prices

At the G-20 last month, Treasury Secretary Steven Mnuchin said he "chit chatted" with the Chinese delegation on the sidelines of the finance chief summit.

Phil Levy, senior fellow on the global economy at the Chicago Council on Global Affairs, said the rate hike is in keeping with the president's strategy of continuously increasing pressure on China.

There's a sense among some in the administration that if you "keep hitting China hard enough, they're going to buckle," Levy said. "There has been no evidence of this."

The more Trump pushes China, the more Beijing will feel like it can't back down at the risk of appearing weak domestically, he added.

The Trump administration is also expected to slap tariffs on an additional $16 billion of goods soon, but officials on Wednesday didn't provide any further details on timing.

The Chinese yuan has fallen sharply against the dollar since the tariffs were first proposed.

That has made Chinese goods less expensive and could take some of the bite out of any tariffs the United States imposes.

Senior administration officials said there was no specific catalyst for raising the tariff other than a desire to stop what they believe are China's unfair trade practices.

"From a broad standpoint, it's important that countries refrain from devaluing their currencies for trade purposes," said an official.

--CNN's Julia Horowitz contributed to this report.

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CountyCasesDeaths
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