U.S. ups China goods tariffs in midst of D.C. trade talks


Chinese Vice Premier Liu He, center, shakes hands with top U.S. trade negotiators in Washington on Friday.

ReutersWASHINGTON/BEIJING (Reuters) — The United States escalated a tariff war with China on Friday by hiking levies to 25 percent for $200 billion worth of Chinese goods in the midst of last-ditch talks to rescue a trade deal.

But even as Beijing threatened retaliation, negotiators in Washington agreed to stay at the table for a second day, keeping alive hopes of an eventual agreement.

U.S. President Donald Trump, who has adopted protectionist policies as part of his “America First” agenda, issued orders for the tariff increase, saying China had “broke the deal” by reneging on commitments made during months of negotiations.

Trump also said he would start the “paperwork” on Friday for 25 percent duties on another $325 billion in Chinese imports.

In Beijing, China’s Commerce Ministry said it “deeply regrets” the U.S. decision, adding that it would take necessary countermeasures, without elaborating.

Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday and were expected to resume efforts on Friday to rescue a deal that could end a 10-month trade war between the world’s two largest economies.

The Commerce Ministry said negotiations were continuing, and that it “hopes the United States can meet China halfway, make joint efforts, and resolve the issue through cooperation and consultation.”

With negotiations in progress and no action from the Trump administration to reverse the increase, U.S. Customs and Border Protection imposed the new 25 percent duty on more than 5,700 categories of products leaving China after 12:01 a.m. EDT on Friday.

The Office of the U.S. Trade Representative separately said seaborne cargoes shipped from China before midnight were not subject to the new tax as long as they arrive in the United States prior to June 1. Those cargoes will be charged the original 10 percent rate.

The grace period was not applied to three previous rounds of tariffs imposed last year on Chinese goods, which had much longer notice periods of at least three weeks before the duties took effect.

“This delay might create an unofficial window during which the U.S. and China can continue to negotiate,” investment bank Goldman Sachs wrote in a note, adding that it was a “somewhat positive sign” that talks were continuing.

Trump gave U.S. importers less than five days notice about his decision to increase the rate on the $200 billion category of goods to 25 percent, which now matches the rate on a prior $50 billion category of Chinese machinery and technology goods.

U.S. stock futures fell and Asian shares pared gains after the United States went ahead with its threatened tariff hike, reflecting investors’ worries that a protracted trade war would hit global economic growth.

E-mini futures for U.S. S&P 500 slipped, was last down 0.2 percent in volatile trade. MSCI’s broadest index of Asia-Pacific shares outside Japan was more than 1 percent lower.

Chinese share markets fell on their reopening after the lunch break but quickly recovered ground, as investors took heart from the continuation of talks.

The yuan also strengthened against the dollar.

“I think the Chinese in the end will want to keep negotiations going. The question is: Where do they go for retaliation?” said James Green, a senior adviser at McLarty Associates who until August was the top USTR official at the embassy in Beijing.


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