China Announces List of $3 Billion in US Exports That Could Face Tariffs
American tariffs on aluminum and steel are safeguard measures masquerading as a national security action, and therefore, the Chinese Ministry of Commerce is within its rights to prepare safeguard tariffs in response, the ministry said in a March 23 notice. The country also released a list of products that will be subject to the new tariffs. That list, which is in Chinese, is reportedly divided into two phases. The first phases would include 15% tariffs on products like nuts, wine and seamless steel pipes, while the second phase would add a 25% tariff on pork and aluminum, according to The Wall Street Journal. The notice didn't say when the tariffs would take effect.
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The largest items by value in that group are cherries, pistachios and oranges. It also includes tens of millions of dollars' worth of wine and boiler tubes. The period of consultation is required under World Trade Organization rules, and China is very clear it wants to uphold the WTO, while it accuses the U.S. of severely damaging the system. The Pentagon sent a memo before the Section 232 measures were announced (see 1802230018) that said there is no need for aluminum tariffs on national security grounds but that imports of steel have damaged the U.S. military industrial base.
That second phase of new tariffs would be on U.S. exports that come in at larger volumes, including scrap aluminum, a sector with almost $650 million worth of product entering China from January to mid-October 2017, and pork. “We sell a lot of pork to China, so higher tariffs on our exports going there will harm our producers and undermine the rural economy,” said National Pork Producers Council President Jim Heimerl, a farmer from Johnstown, Ohio, in a statement released after China's announcement. “No one wins in these tit-for-tat trade disputes, least of all the farmers and the consumers.” The trade group said China bought $1.1 billion worth of pork last year, and it's the third-largest export market for pork farmers.
The head of the WTO warned that escalation is a real danger right now. WTO Director-General Roberto Azevêdo said everyone in Geneva was talking about the trade tensions, and that's where these discussions belong. "Actions taken outside these collective processes greatly increase the risk of escalation in a confrontation that will have no winners, and which could quickly lead to a less stable trading system. Disrupting trade flows will jeopardise the global economy at a time when economic recovery, though fragile, has been increasingly evident around the world."