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Why Did Trump Put Tariffs On China

What Tariffs Have Been Imposed

Why Trump needed to put tariffs on China

Mr Trump’s tariffs policy aims to encourage consumers to buy American products by making imported goods more expensive.

The US has imposed tariffs on more than $360bn of Chinese goods, and China has retaliated with tariffs on more than $110bn of US products.

Washington delivered three rounds of tariffs in 2018, and a fourth one in September last year. The most recent round targeted Chinese imports, from meat to musical instruments, with a 15% duty.

Beijing hit back with tariffs ranging from 5% to 25% on US goods.

Section 301 Frances Digital Services Tax

On December 2, 2019, the United States Trade Representative published the of a Section 301 investigation into Frances Digital Services Tax . The USTR found that the DST discriminates against U.S. companies and suggested potential duties up to 100 percent on a list of French products with approximate trade value of $2.4 billion. The USTR also stated it is exploring whether to open Section 301 investigations into DSTs of Austria, Italy, and Turkey.

The List Of Products Affected By Trumps Tariffs

Trumps list of items to be tariffed has come in four stages. The first two affected roughly $50 billion of the United States $500 billion worth of imports from China. The third list, which went into effect on September 24, 2018, affects $200 billion worth of goods. List 4, not yet in place, will encompass all products not currently hit by List 1, List 2, or List 3.

The first two lists have 25% tariffs. The third list started at 10% and escalated to 25% on May 10, 2019. This is in addition to any existing duties your product may have. So for example, if your product has an existing 8% duty, the new rate would be 8% + 25% = 33%. On August 23, 2019 it was announced that duties on all three of these lists would increase from 25% to 30% on October 1, 2019.

Below is a complete list of all the products affected by Trumps tariffs. These are lists of HS Codes. If you are an importer and do not keep accurate records of your HS codes, now is the time to review your previous customs forms and figure out what these codes are for your products.

List 1
Does not include products approved by Congress for exclusion listed here.

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How China Became Trumps Trade Nemesis

Chinas explosive rise was a shock to the global trading system. For decades, Western economies like the United States have struggled with the growth of this economic powerhouse.

The administration did remove roughly 300 product lines and some individual products from the list after companies objected. Among the items dropped are smart watches, Bluetooth devices, bike helmets, plastic gloves, high chairs, play pens and certain chemicals. But, in some cases, partial product lines will be taxed while other parts are not. For example, high tech network routers and smart watches share a product line, but under the United States trade representative plan, the routers would be subject to tariffs while watches are not.

It will be a lot of money coming into the coffers of the United States of America. A lot of money coming in, Mr. Trump said during remarks at the White House on Monday. He added that the United States cannot tolerate the trade gap between what it exports to China and what it imports from that country.

We cant do that anymore, he said.

Mr. Trumps decision is a significant escalation of an already serious trade dispute one with seemingly no end in sight. After months of failed trade talks, top officials from China and the United States were tentatively scheduled to talk later this month in Washington. But it is unclear whether Beijing will agree to come to Washington with the new tariffs set to go into effect.

‘it’s Really Hard To Come Up With An Alternative’

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When Trump launched his trade war with China in 2018, it was a sudden and significant departure from a philosophy of free trade and open markets that had dominated American trade politics for decades.

He imposed tariffs on about $360 billion worth of goods imported from China, a strategy intended to give the administration leverage to force China to come to the negotiating table. Former Trump officials said it ultimately led to a deal that pledged more protections for U.S. intellectual property.

Kelly Ann Shaw helped negotiate that deal, known as Phase One. The former deputy director of the National Economic Council said it’s easy to criticize tariffs but difficult to come up with a better option.

“Controversy over tariffs and their role in the economy and their role as a tool of economic statecraft have been debated in U.S. policy for 200 years,” she said. “Tariffs are an imperfect tool … but it’s really hard to come up with an alternative.”

A U.S. flag flies near containers stacked high on a cargo ship at the Port of Los Angeles in this file photo.hide caption

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A U.S. flag flies near containers stacked high on a cargo ship at the Port of Los Angeles in this file photo.

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Predictions For The Future

As polarizing as Donald Trump is, getting tough on China is one issue he has relatively bipartisan support on. As Elizabeth Economy from China File said The trade war signifies far more than President Trumps desire to rebalance the bilateral trade deficit. It represents the culmination of decades of pent-up frustration within the United States over Chinas failure to make good on the promise of its 2001 WTO.

The arrest of Huawei CFO Meng Wanzhou was symbolic of the longstanding disagreements between China and the United States.

While the current impasse will likely be resolved, its likely that strong resentment and disagreements on both sides of the Pacific will remain. Many have raised the possibility that even if the tariffs are removed in the short term, they may be reinstated at a later date. As China expert Michael Hirson said, deals implementation is likely to be rocky, with a real risk that the U.S. will reimpose tariffs in the next one-two years.

Chamber: Tariffs Hurt Us Consumers Manufacturers

Biden has made countering China a centerpiece of his foreign and domestic policy, often complaining that better policies are needed to ensure the United States can better compete with the economic powerhouse.

As the Biden administration’s review of the tariffs dragged on, frustration from business groups has grown.

Last month, more than 30 business associations sent a letter to the administration complaining the tariffs are “costly and burdensome.”

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Why Tariffs On Chinese Goods Make Sense

The Trump administration has released a list of tariffs on Chinese goods that have benefited from intellectual property theft, totaling $50 billion. The products range from flat-screen TVs to aircraft parts.

This has elicited condemnations from well-heeled editorial boards in New York and Washington, who call them hasty, ill-conceived, haphazard, and guaranteed to invite an escalating response from the Chinese government.

But they will all agree to the same caveat: State-sponsored Chinese actors have indeed walked off with an incredible amount of hard-earned American IP.

Rather than continuing to ignore the problem, this administration is acting aggressively to stop it. Its an instance when the White House should actually be applauded.

Lets consider a few numbers.

IP-intensive industries in the United States support approximately 45.5 million jobs, represent more than 39 percent of GDP, and account for 52 percent of our exports. The administrations Section 301 report, the basis for these tariffs, found China to be the worst infringer of American IP, stemming primarily from Chinese policies and laws. Altogether, Chinese theft alone costs our economy between $225 billion and $600 billion annually. Put another way: Weve lost more than $1.2 trillion to it since 2013.

But while such carrots and sticks slowed the cybertheft attempts, they didnt stop. And theyve resumed their pace again.

Scott Paul is president of the Alliance for American Manufacturing.

How Will China Respond

Hereâs How President Trumpâs Tariffs Could Cost You More Out Of Pocket | Velshi & Ruhle | MSNBC

The short answer is, we do not know. Geng Shuang, at Chinas foreign ministry, told reporters to stay tuned about any retaliation.

In a statement shortly after the tariff increase came into effect, Chinas commerce ministry said it deeply regrets the need to take necessary countermeasures.

What is clear is that Beijing will not be able to impose reciprocal tariffs, because Chinas imports from the US are less than $200bn. But it does have other options, including raising existing tariffs, restricting US companies in China and making it tougher for Americans to qualify for visas.

That said, China has also expressed hope both sides could reach an agreement.

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How Trump Worsened The Semiconductor Shortage

Many factors conspired to cause the semiconductor shortage thats constraining the production of cars and many other products. The coronavirus pandemic massively disrupted supply chains. Remote workers stocked up on chip-heavy computers and other gizmos. Same with bored consumers doing more streaming and gaming. Fires at two Japanese chip plants cut into supply. Then a surprisingly strong recovery produced demand far more robust than manufacturers expected.

But before the coronavirus pandemic even arrived in 2020, President Donald Trumps trade policies cut into the number of semiconductors available in the United States. In 2018, as part of his trade war with China, Trump imposed 25% tariffs on $34 billion worth of Chinese imports, including semiconductorsthe first of several salvos in Trumps trade war with China. Those tariffs are still in effect, and chip imports from China have fallen by half as the price has gone up.

China now accounts for only about 5% of imported semiconductors, according to research firm Panjiva. But imports from other countries have not gone up to offset the lost supply from China. A 5% contraction in supply during a shortage can have outsized effects.

Biden hasnt repealed the Trump tariffs on Chinese imports, but he could. He could also issue targeted waivers for semiconductors alone, or for any product category. The office of the U.S. Trade Representative has indicated it may do that.

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How To See How Much Your Competitors Are Importing From China

Want to see how much your competitors are importing from China?

Custom import records are public information in the United States and there are multiple tools that allow you to simply search for a company name and see exactly how much these companies are importing from China.

Research tools which lean on public U.S. customs records can be extremely valuable for finding and verifying Suppliers.

My favorite tool for this is tool which costs less than $50 a month . These tools will neatly summarize all of the information included on a particular companys Bill of Lading information such as product type, quantity, and supplier name/address.

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Foreign Profits Dont Generate Domestic Investment Windfalls

The USCBC report claims that U.S. companies earn profits on their Chinese investment that they then funnel into increased American investment. But again, this assumption ignores the crucial distinction between economies where business investment is constrained by high capital costs and economies where investment is constrained by weak demand. Many multinational American companies are already sitting on huge hoards of cash for which they cannot find a productive use: that hardly seems to indicate that American businesses need foreign profits to fund even more investment at home.

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U.S. will hold off on new China tariffs, Trump announces

Among the key findings of the research:

– The economists found a long-term decline in U.S. consumer well-being of 7.8%: Our results show that the trade-war announcements caused large declines in U.S. stock prices, expected TFP , and expected inflation largely by moving macro variables, but also by causing declines in the returns of firms trading with China. We find that markets expect the trade war to lower U.S. welfare by 7.8 percentage points. Total Factor Productivity is the portion of output not explained by the amount of inputs used in production, as defined by the Harvard Business School.

– The decline in stock market value caused by trade war announcements amounted to a $3.3 trillion loss of firm value . That is larger than the $1.7 trillion estimate in the loss of firm value in an earlier paper from the economists.

The data reveal that there were large and persistent movements in stock prices and inflationary expectations following these trade-war announcements, according to Amiti, Kong and Weinstein. We see that the stock market fell on all of the event dates except one U.S. event date and one China event date, with a total drop of 10.4% over all of the events, and 12.9% over the three-day windows . These drops in the market imply substantial drops in expected profitability for U.S. firmsa factor that . . . suggests will drive decreases in the expected wage.

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‘our Object Is Not To Inflame Trade Tensions With China’

The Biden administration has said the current Trump trade deal with China does not sufficiently address some of the larger systemic problems in the relationship. U.S. trade experts say the Chinese government has been providing large-scale subsidies to Chinese companies that gives them an unfair advantage in the global marketplace that hurts American companies and American workers.

Tai said she intends to have “frank” conversations with her Chinese counterpart in the coming days. And while it doesn’t appear that there’s a noticeable thaw in tensions between the two countries, the White House is keen to avoid a trade war.

“Our objective is not to inflame trade tensions with China,” Tai said. “Durable coexistence requires accountability and respect for the enormous consequences of our actions.”

White House officials say they would welcome change from China, but they recognize China may not change and they need to craft a strategy that deals with China as it is, rather than as they wish it were.

So the Biden administration says it needs to prioritize investments in key domestic sectors to ensure the United States remains competitive.

“China and other countries have been investing in their infrastructure for decades,” Tai said. “If we are going to compete in the global market, we need to make equal or greater investments here at home.”

Wto Dispute European Union

In October 2019, the United States won a nearly 15-year-long World Trade Organization dispute against the European Union. The WTO ruling authorizes the United States to impose tariffs of up to 100 percent on $7.5 billion worth of EU goods. Beginning October 18, 2019, tariffs of 10 percent were to be applied to aircrafts and 25 percent on agricultural and other products .

Tariffs on the European Union were suspended in summer 2021 for five years under an agreement reached by the Biden administration.

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