China yesterday warned the US that it was “not afraid of a trade war” as it threatened tariffs on US$3 billion of US goods in retaliation for US President Donald Trump’s moves against Chinese imports.
Beijing unveiled a list of products that could face duties of up to 25 percent, from fresh fruit to pork and wine, although it stopped short of pulling the trigger, as it indicated its readiness to negotiate an agreement.
“China does not want to fight a trade war, but it is absolutely not afraid of a trade war,” the Chinese Ministry of Commerce said.
Hours earlier, Trump signed an order that could result in restrictions on Chinese investment in the US, saying that it would be the “first of many” trade actions.
“We have a tremendous intellectual property theft situation going on,” Trump said as he signed the new trade order, which could include duties as high as 25 percent.
The action did not immediately impose any new tariffs, but within two weeks US Trade Representative Robert Lighthizer is scheduled to publish a list of the products that could be hit with tariffs.
US Secretary of Commerce Wilbur Ross on Thursday suggested that the new measures on intellectual property were a way of bringing Beijing to the table, telling CNBC that they were “the prelude to a set of negotiations.”
However, a senior US official later said that Washington was “not interested in creating terms for a dialogue.”
“We are interested in creating some motivation for China to actually take concrete actions to further open their markets to US exports,” the official said on condition of anonymity, adding that the two sides are constantly talking.
The ministry warned that a 15 percent tariff on 120 goods worth almost US$1 billion — including fresh fruit, nuts and wine — would be imposed if the US fails to reach a “trade compensation agreement” within an unspecified time frame.
In a second step, a 25 percent tariff would be imposed on eight goods totaling nearly US$2 billion, including pork and aluminum scrap, after “further evaluating the impact of the US measures on China,” the statement said.
The measures were specifically in response to US steel and aluminum tariffs, which went into effect yesterday.
The list noticeably does not include soybeans, a key US export from Trump-voting states that Chinese state-run newspaper the Global Times had suggested should be targeted by Beijing.
Australia and New Zealand Bank economist Betty Wang (王蕊) said China’s reaction was “relatively mild.”
“From China’s perspective, it absolutely does not want to see a trade war. Coming back to the negotiation table is a relatively good result,” Wang said.
US Vice President Mike Pence hailed the new measures, saying that they made it clear “the era of economic surrender is over.”
White House National Economic Council Deputy Director Everett Eissenstat said the new duties would target sectors where “China has sought to acquire an advantage through the unfair acquisition or forced technology transfer from US companies.”
Lighthizer indicated that the industries could include aerospace, maritime and rail transport equipment, and new-energy vehicles.
The order also directed the US Department of the Treasury to develop new proposals to increase safeguards against Chinese investments in the US that could compromise national security.
In addition, the US trade representative is to go after China at the WTO, charging Beijing with preventing US companies from freely licensing their technology in China.
The senior US official said Washington was “very optimistic” that allies such as Europe, Japan and Australia would join its WTO case.
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