May 23, 2019

China Retaliates Against the U.S. With Its Own Higher Tariffs

By contrast, China left unchanged at 5 percent its tariffs on about a tenth of the product categories in the $60 billion. These included its tariffs on imports of American tires, light bulbs and certain paper products.

Neither the American tariffs nor China’s retaliation will go into effect right away. Despite the rising tensions, the Trump administration structured its tariff increase on Friday so that it won’t take effect for a few weeks, giving both sides a bit more room to reach a deal. In a departure from the usual practice of assessing tariffs on goods based on the date when they reach American seaports and airports, the Trump administration declared that the increased tariffs on $200 billion a year in goods would be applied only to shipments that left China from Friday onward.

Goods that travel by sea take two to four weeks to reach the United States from China, depending mainly on whether the ship sails to the East or West Coast and how fast the ship travels. That means the effect won’t be felt for a few weeks except for the small share of goods moving by air.

Chris Rogers, a trade analyst at Panjiva, a trade data firm, said that roughly 90 percent of all American imports from China come by sea, and the rest by air. An even higher proportion of the $200 billion in goods being hit by the latest tariff increase is likely to come by sea, he said, because the higher tariffs do not cover big categories like iPhones that come to the United States almost entirely by air.

There is also a practical reason for the Trump administration not to have imposed the tariff increase right away: Updating customs procedures can be slow. The Trump administration “wanted to start the clock but be realistic about implementation,” said James Green, the top trade official at the United States embassy in Beijing until August and now a senior adviser at McLarty Associates, a Washington consulting firm.

The question now is whether another round of tit-for-tat tariff increases portends an economic struggle between the United States and China that could last for many years. Since President Trump was elected, the two sides have repeatedly seemed close to a deal only for it to fall apart. Commerce Secretary Wilbur Ross seemed to have the outlines of a deal in 2017. Treasury Secretary Steven Mnuchin talked of a deal being at hand a year ago.

President Trump himself was upbeat about the prospects for a deal last month. Chinese officials have been consistently encouraging about progress toward a deal for the past two years, even though a hardening of China’s stance last week appears to have contributed to Mr. Trump’s decision this week to raise tariffs.

Article source: https://www.nytimes.com/2019/05/13/business/trump-trade-china.html?partner=rss&emc=rss

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