18 Sep 2018

US imposes new $200bn tariffs on China

5:19 pm on 18 September 2018

The Trade Minister is worried about the impact the United States' new tariffs on China could ultimately have on New Zealand.

US President Donald Trump

US President Donald Trump has enforced higher import taxes will apply to more than 5000 Chinese goods. Photo: AFP

The US is imposing new tariffs on $US200 billion ($NZ304b) worth of Chinese goods as it escalates its trade war with Beijing.

New Zealand is also threatened more, if China chooses to retaliate.

Trade Minister David Parker said that did not bode well.

"Although the direct effect of this on New Zealand is not much because they're not covering our product lines, the deterioration and world trading environment worries us," said David Parker.

The higher import taxes will apply to more than 5000 items, marking the biggest round of US tariffs so far.

Handbags, rice, and textiles will be included, but some items expected to be targeted such as smart watches and play pens have been excluded.

China had already vowed to retaliate if the US imposed further tariffs.

The taxes will take effect from 24 September, starting at 10 percent and increasing to 25 percent from the start of next year.

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US President Donald Trump said the latest round of tariffs was in response to China's "unfair trade practices, including subsidies and rules that require foreign companies in some sectors to bring on local partners.

"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," he said.

He also warned that if China retaliated then the US would "immediately pursue phase three" which would mean imposing further tariffs with taxes on another $267bn worth of Chinese products.

If he does go ahead with a further $267bn worth of tariffs, it would mean virtually all of China's US exports would be subject to new duties.

This latest round of tariffs marks the third set put into motion so far this year.

In July, the White House increased charges on $34b worth of Chinese products. Then last month, the escalating trade war moved up a gear when the US brought in a 25 percent tax on a second wave of goods worth $16b.

However, this latest round is the biggest to date, and unlike the earlier rounds this latest list targets consumer goods, such as luggage and furniture.

That means regular households may start to feel the impact.

US companies have already said they are worried about the effect of higher costs on their businesses.

While economists generally estimate that the overall economic impact of the tariffs will be a fraction of a percentage point, they caution that the effects are difficult to predict.

What items have been targeted?

The list slated for tariffs originally included more than 6000 items, but US officials said they had removed about 300 types of items.

Those included high-profile consumer products, such as smart watches, bicycle helmets, play pens and baby car seats.

The changes come after fierce opposition from companies, including global tech giants such as Apple, Dell and Hewlett Packard Enterprise.

The firms are worried the tariffs will increase their costs since many of their products are manufactured in China.

Officials said they wanted to shield consumer goods from the taxes as much as possible.

However, some products that help computer networks operate, such as routers, remain on the latest list.

Meanwhile, David Parker is promising New Zealand exporters that the government is doing everything it can to secure an exemption to the United States' steel and aluminium tariffs.

Earlier this year, the US slapped trading tariffs on the products from all of its major allies - but made some exemptions, Australia among them.

New Zealand missed out and is still gunning for one, having sent a letter to the US administration months ago.

David Parker said the government has still had nothing back, but was making moves in the coming months to ensure New Zealand was on the radar.

"I'm off to Washington and Ottawa myself on these issues in the next month and a half. Our lead trade negotiator is off to Geneva as we speak, we're trying all the angles that we can."


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