China may hike tariffs on US pork, aluminum, other goods

2018-03-23 07:36
Containers are piled at a port in Qingdao in eastern China's Shandong province awaiting export. (AP, file)

Containers are piled at a port in Qingdao in eastern China's Shandong province awaiting export. (AP, file)

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Beijing - China announced a $3bn list of US goods including pork, apples and steel pipe on Friday that it said may be hit with higher tariffs in a spiralling trade dispute with US President Donald Trump that companies and investors worry could depress global commerce.

The Commerce Ministry urged Washington to negotiate a prompt settlement to the conflict over Trump's tariff hike on steel and aluminium but set no deadline.

Separately, the ministry also criticised Trump's decision on Thursday to approve a possible tariff hike on billions of dollars of Chinese goods in a dispute over Beijing's technology policy.

READ: Beijing protests US sanctions on Chinese firms over North Korea ties

The ministry slammed that as "trade protectionism" but gave no indication how Beijing might respond.

China's proposed tariff hikes in response to the steel and aluminium duties appeared to be aimed at increasing domestic US pressure on Trump by making clear which exporters, including farm areas that voted for the president in 2016, might be hurt.

"Beijing is extending an olive branch and urging the US to resolve trade disputes through dialogue rather than tariffs," said economist Vishnu Varathan of Mizuho Bank in a report. "Nevertheless, the first volley of shots and retaliatory response has been set off."

Second list

The ministry said Beijing was considering a tariff increase of 25% on pork and aluminium scrap, mirroring Trump's 25% charge on steel.

A second list of goods including wine, apples, ethanol and stainless steel pipe would be charged 15%, mirroring Trump's tariff hike on aluminium.

The ministry said Chinese purchases of those goods last year totalled $3bn. That would be less than 1% of Chinese imports of US goods and far smaller than the range of imports targeted by Trump's order on Thursday in the technology dispute.

American business groups have warned Trump his aluminium and steel tariffs could hurt the US economy and disrupt exports.

Abroad, companies worry the dispute could spiral into tit-for-tat import controls by governments worldwide that could dampen global trade.

China's top economic official, Premier Li Keqiang, appealed to Washington on Tuesday to "act rationally" and said: "We don't want to see a trade war."

The higher American duties on aluminium and steel have little impact on China, which exports only a small amount of those products to the US. But private sector analysts have said Beijing would feel obligated to take action to avoid looking weak in a high-profile dispute.

The Commerce Ministry said the higher US tariffs "seriously undermine" the global trading system. It rejected Trump's contention they are needed to protect US national security.

"The Chinese side urges the US side to resolve the concerns of the Chinese side as soon as possible," the ministry said. It appealed for dialogue "to avoid damage to overall Chinese-US co-operation".

Trade surplus

Beijing reported a trade surplus of $275.8bn with the US in 2017, or two-thirds of its global total. Washington reports different figures that put the gap at a record $375.2bn.

The technology dispute stems from complaints Beijing unfairly compels foreign companies to hand over technology in exchange for market access.

Companies in many industries including auto manufacturing that want to operate in China are required to work through local partners, which requires them to give technology to potential Chinese competitors.

The US Trade Representative's office said Trump's action was in response to "unfair and harmful acquisition of US technology".

The USTR said Trump had ordered it to pursue a World Trade Organisation case against Beijing's "discriminatory technology licensing".

The US-China Business Council, which represents American that do business in China, said it agreed Chinese "technology transfer" policies need to be improved but it appealed to both governments to reach a negotiated settlement.

"American business wants to see solutions to these problems, not just sanctions such as unilateral tariffs that may do more harm than good," said USCBC president John Frisbie in a statement.

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