US hits China with new tariffs on goods worth $200 bln

The US is imposing a new tariff on $200 billion worth of Chinese goods, amid an escalating trade war with Beijing.

The tariffs will take effect on Sept. 24, and be set at a level of 10 percent until the end of 2018, President Donald Trump said in a statement on Monday. They will rise to 25 percent on Jan. 1, 2019.

“If China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports,” Trump said.

The latest round of tariffs will apply to almost 6,000 items, including goods such as handbags, rice, and textiles. This will be the biggest round of US tariffs so far.

Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country - and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be “Tariffed!”

— Donald J. Trump (@realDonaldTrump) September 17, 2018

The US President said Washington was imposing fresh tariffs in response to China’s engagement in “numerous unfair policies and practices” relating to US technology and intellectual property, such as forcing American companies to transfer technology to Chinese counterparts.

“We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly.  But, so far, China has been unwilling to change its practices,” the statement said. 

The latest round of tariffs is the third set put into motion so far in 2018.

In July, the White House increased duties on $34 billion worth of Chinese products.

The following month, the trade dispute escalated as Washington imposed a 25 percent tax on a second set of goods worth $16 billion.

China has previously vowed to retaliate against new US tariffs. Early last month, the country unveiled a proposed list of tariffs on $60 billion of American goods, should the US push forward with tariffs on its $200 billion list.

The import taxes would range from 5 percent to 25 percent and cover goods ranging from liquefied natural gas to certain types of aircraft.

"While China cannot match the US tariffs dollar for dollar given the huge trade imbalance, it still has other weapons it could use, including boycotting US products, increasing taxes on earnings of US companies in China, refusing to grant approvals for M&A involving US businesses, and reducing its US debt holdings," FXTM said in a note on Tuesday. 

Investors should brace for more short-term downside risks across equity markets given these uncertainties, the consultancy added.