US President Donald Trump has escalated his trade war with China, ordering his administration to consider more than doubling proposed tariffs on $200 billion worth of Chinese goods to 25 per cent from 10 per cent, as talks between Washington and Beijing remain at a standstill.
The proposal would increase the potential tariff rate from the 10 per cent that the administration had initially put forward on July 10 for that wave of duties in a bid to pressure Beijing into making trade concessions, a source familiar with the plan said on Tuesday.
Trump's tariffs target goods the White House says benefit from industrial policies such as "Made in China 2025", which calls for developing Chinese competitors in robotic, artificial intelligence and other fields.
Since China joined the World Trade Organization (WTO) in 2001, its current account has consistently maintained a surplus, however due to the recent trade conflict with the US that record of performance may be preparing to take a tumble. "If the USA takes measures to further escalate the situation, we will surely take countermeasures to uphold our legitimate rights and interests", spokesman Geng Shuang said at a regular press conference on Wednesday.
US Secretary of State Mike Pompeo (left) shakes hands with Chinese Foreign Minister Wang Yi before their meeting on June 14 at the Great Hall of the People in Beijing.
"We have been very clear about the specific changes China should undertake", said U.S. Trade Representative Robert Lighthizer.
Trump has ultimately threatened tariffs on over $500 billion in Chinese goods, covering virtually all U.S. imports from China.
China's government, however, shows no sign of bending to Washington's pressure. "Now, the USA coerces and pressures others unilaterally".
But China's Foreign Minister Wang Yi said USA efforts to pressure China would be in vain, urging its trade policymakers to "calm down".
China could retaliate by imposing more tariffs of its own, as well as increasing scrutiny and regulation of American businesses seeking to operate in China and encouraging boycotts of us goods.
Washington and Beijing are locked in battle over American accusations that China's export economy benefits from unfair policies and subsidies while stealing American technological know-how. "Unilateral threats and pressure will only be counterproductive".
The USTR said it will extend a public comment period for the US$200 billion list to Sep 5 from Aug 30 due to the possible tariff rate rise.
Mr. Geng said China is also open to resuming trade talks but only based on mutual respect and equality.
American companies, industry and consumer groups have pleaded with the administration to avoid tariffs, saying they could raise their costs and eventually lead to price hikes for consumers.
Increasing the rates to 25 percent could make them significantly more painful.