Trump Considers Raising Proposed Chinese Tariffs

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The White House has threatened to impose tariffs as high as 25%, on $200 billion of Chinese goods, from the original proposal for 10%.

President Trump has directed senior officials within his administration to consider increasing the tariffs sharply in order to pressure Beijing to bend to the United States.

U.S. Trade Representative Robert Lighthizer said the President directed him to hike the proposed 10% tariff because Beijing has failed to meet the demands of the US and imposed retaliatory levies.

Robert Lighthizer issued a statement on Wednesday saying, “This week, the President has directed that I consider increasing the proposed level of the additional duty from 10 percent to 25 percent. The 25 percent duty would be applied to the proposed list of products previously announced on July 10.”

The Trump Administration continues to urge China to stop its unfair practices, open its market, and engage in true market competition. We have been very clear about the specific changes China should undertake. Regrettably, instead of changing its harmful behavior, China has illegally retaliated against U.S. workers, farmers, ranchers and businesses.

The increase in the possible rate of the additional duty is intended to provide the administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens.” 

On Thursday, Chinese Foreign Ministry spokesman Geng Shuang called out on the United States in a news briefing for “blackmail”. Geng said, “We would advise the United States to correct its attitude and not try to engage in blackmail. This won’t work on China. Secondly, we would advise the US side to return to reason, and not blindly let emotions affect their decisions, because in the end this will harm themselves.”

Chinese stock markets reacted negatively to the threats on Thursday, with Hang Seng index taking a dip of 2.6% to the weakest level since October, last year.

CSI 300 index fell as much as much as 3.6%. The Chinese yuan also slipped lower against the dollar, pushing its decline to more than 4.5% since the beginning of the year.

Low-level negotiations between the US and Chinese officials are currently ongoing, and are aimed at creating a path for top-level talks. In June, Trump directed Lighthizer to identify $200 billion in Chinese imports that could be subject to a tariff of 10%.

Beijing responded saying it would hit back with countermeasures if the US went ahead with its threats.

Trump is facing increased domestic backlash for starting and escalating a trade war with China. Economists warn that the tariffs will punish American firms that import goods such as plastics and semiconductors from China.

However, the President has insisted that a trade war is easy to win, while stressing on his “America First” policy.

The White House has also threatened other major US trading partners like the European Union, Canada, and Mexico with tariffs, hoping that they will eventually be forced to come to the negotiation table.

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