US, China hit each other with $34 billion in tariffs
- The U.S. imposed 25% duties on $34 billion worth of Chinese imports Friday morning, following through on a proposal in June to subject more than 800 products to duties. Tariffs on another $16 billion in goods is scheduled to take effect in two weeks, for a total of $50 billion.
- China responded swiftly with retaliatory tariffs of $34 billion on goods including soybeans, pork and electric vehicles. The country's Commerce Ministry said the U.S. has "ignited the largest trade war in economic history," according to Bloomberg.
- Trump said the U.S. could target an additional $200 billion in Chinese goods, followed by another $300 billion — bringing duties on a total of $550 billion Chinese products, which is more than the $506 billion the U.S. imported from China in 2017, the Associated Press reported.
Friday morning's tariffs from the U.S. and China were highly expected — but that doesn't soften the blow to companies struggling to keep costs at a manageable level.
In anticipation of the July 6 date of imposed tariffs, many businesses rushed to ship goods, import raw materials and export finished products before duties took effect.
Both imports and exports of vehicles at U.S. ports surged in May, and ports are also seeing more "knockdown kits," or partly-assembled cars, which in some markets face lower duties than the finished product.
A cargo ship known as Peak Pegasus was racing to drop off its load of soy beans before the 25% duties went into effect. (Sad update: it didn't make it). Some Chinese ports delayed clearing shipments from the U.S. through customs on Friday, waiting official instructions from the Chinese government on whether to start collecting duties. The uncertainty over tariffs created backups at many of the ports, Reuters reported.
While U.S. tariffs levied against Canada, Mexico and the European Union were justified for national security reasons, the dispute between the U.S. and China revolves around technology and theft of intellectual property.
Businesses have acknowledged the need to send a message to China about its technology practices, but most disagree that tariffs are the right away to go about it.
"China cheats ... [but] we now have an unparalleled opportunity to stop these practices at their root, through a strategic approach that includes the negotiation of a fair, bilateral, enforceable, rules-based trade agreement," The National Association of Manufacturers wrote in a statement. "Tariffs, though, have not and will not solve the existing problems in China ... No one wins in a trade war."
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