China will raise tariffs on 60 billion US dollars in response to a US decision to increase duties on Chinese goods, the Ministry of Finance said Monday.
Beijing will increase tariffs on more than 5,000 products to as much as 25%. The duties on some other goods will also rise to 20%. These rates will rise from 10% or 5% previously.
The move follows President Trump’s decision to raise tariffs on Chinese products worth 200 billion dollars to 25 percent from 10 percent. The world’s two largest economies are struggling to sign a trade deal and end a continuing dispute that threatens to hurt the global economy.
The latest move in the trade war between the world’s biggest economists shocked investors and markets. Major US stock indexes rose more than 2% on Monday amid escalations.
The duties were largely aimed at American farmers, who largely supported Trump in 2016 but suffered from the earlier shots in Trump’s trade war with China. The products include peanuts, sugar, wheat, chicken and turkey.
In an increase in tariffs on Chinese goods on Friday, the White House said that Beijing has backed out of important parts of the developing trade agreement. While Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lightzier met Chinese negotiators last week in talks described by Mnuchin as “constructive”, the two sides could not reach an agreement.
Trump, who wants to tackle grievances such as intellectual property theft, forced technology transfer and trade deficit, pushed China into a deal before retaliation on Monday morning. In a series of tweets, the president said tariffs were “very bad for China.” He declared that “China should not retaliate” because it will “only get worse,”.
The US President wrote about China and its president Xi Jinping: “You had a great deal, almost completed, & you backed out!”
Trump threatened to impose a 25 percent tariff on $325 billion of Chinese goods, which are still tax-free. The president noted that he was satisfied with leaving his duties, saying they would hurt China more than the United States.
The president has repeatedly claimed that China bears the burden of costs from customs duties. But the burden is largely on businesses and consumers in the United States.
“Fair enough. In fact, both sides will pay.” Larry Kudlow, chief economic adviser at Trump, was pressed on Sunday in an interview with Fox News.
Despite this, Trump claimed in a tweet on Monday that “there is no reason for the U.S. Consumer to pay the Tariffs” He also said that tariffs “can be completely avoided if you buy from a non-Tariffed Country, or you buy the product inside the USA.”
The United States hopes to revive discussions as it tries to reach an agreement. On Sunday, Kudlow said there was “a strong possibility” that Trump would meet Xi at the G20 summit in Japan next month.
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