U.S. Raises China Tariffs, Threatens to Impose More

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Washington, D.C., and Beijing, China—President Donald Trump has raised existing tariffs on $200 billion of Chinese imports to 25%, effective on all goods that shipped out of China after 12:01 Friday morning. Goods that shipped prior to midnight will be charged the previous 10% rate.

Beijing expressed intent to retaliate, although they have not specified how. The Chicago Tribune notes that Chinese officials can and have targeted American companies operating in China by slowing customs clearance and increasing regulatory scrutiny, hampering operations.

According to The Wall Street Journal (WSJ), President Trump has told reporters the U.S. is taking steps to impose 25% tariffs on the remaining $325 billion in Chinese goods that are currently untaxed.

Mr. Trump also tweeted that there’s “no need to rush” in these trade negotiations.

According to Oxford Economics, a 25% tariff on all imports would reduce the U.S. GDP by .5% in 2020, costing the economy $100 billion, or $800/household.

WSJ further quoted President Trump as saying tariffs collected by the U.S. will be used to buy domestically grown agricultural products, which will then be shipped overseas as humanitarian aid.

The Natural Products Association (NPA) issued a tweet that included a Call to Action, expressing support for the “Administration’s goal of establishing freer and fairer trade,” but asking members of the Industry to call on Congress to allow for ingredients used by the Industry to be included as List 3 exemptions, to minimize impact on the dietary supplements and natural products market.

And price increases are anticipated: As reported by the New York Times (NYT), “Thus far, most companies have managed to absorb the brunt of the initial batch of China tariffs, keeping inflation at bay, but analysts said that jumping to a rate of 25% is impossible to ignore.” NYT quoted Henrietta Treyz, director of economic policy at Veda Partners, as saying: “Any maneuverability these companies had been using to blunt the impact of these tariffs is very likely exhausted.”

All of that being said, as of publishing time, China’s vice-premier Liu He has told Fox News that today’s talks went well and will continue in the future, according to The Guardian, which also quotes U.S. treasury secretary Steven Mnuchin as describing the talks as “constructive.” The positive comments on both sides may be reassuring investors: According to The Guardian, “The Dow is now down a mere 50 points, or .2%, having been 300 points poorer earlier.”

For a list of product categories affected by the tariffs, go here.

 

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