SINGAPORE (Aug 19): China called planned US tariffs on an additional US$300 billion ($416.7 billion) in Chinese goods a violation of accords reached by Presidents Donald Trump and Xi Jinping, signalling that a US move earlier last week to delay some of those levies was not enough to stave off retaliation.
The new 10% tariffs have taken the US and China off the track of resolving their dispute through negotiation, the State Council Tariff Committee, which has overseen tit-for-tat retaliation, said in a short statement on Aug 15. China “has no choice but to take necessary measures to retaliate”, it said, without specifying what the nation would do.
European stocks declined and US equity futures fell. The Stoxx Europe 600 Index moved lower while the three main US equity contracts dropped.
Trump announced the new tariffs this month, after which China halted purchases of agricultural goods and allowed the renminbi to weaken. Still, top negotiators held a phone call meeting earlier last week and the US delayed the imposition of some of the new tariffs. Negotiators also agreed to have another phone call in the coming two weeks and people familiar said earlier the Chinese delegation was sticking to its plan to travel to the US in September for face-to-face meetings.
The statement indicates that China does not think the US’ delaying some of the tariffs is enough, says Zhou Xiaoming, a former Ministry of Commerce official and diplomat. China is very serious and is sticking to the position that no new tariffs should be imposed at all, he says, adding that China’s retaliation “may not be limited to tariffs”.
Hu Xijin, editor-in-chief of the Communist Party’s Global Times newspaper, echoed that sentiment. He tweeted before the Aug 15 announcement that China wants both sides to respect the consensus reached when Trump and Xi met in Osaka in June. “I doubt the Chinese side will resume large-scale purchase of US farm goods under the current circumstances,” he says.
Less than 12 hours before the Chinese statement on retaliation, Trump appeared to float the possibility of another meeting with Xi. In a flurry of tweets, Trump defended his tariffs decisions, praised Xi and urged the Chinese president to “humanely” resolve the protests that have gripped Hong Kong for more than two months. He ended the posts with an apparent overture to Xi — writing “Personal meeting?” — without clarifying whether he was suggesting another summit.
The Aug 15 statement could indicate that it will not take long for China to reveal its own retaliatory tariffs, according to Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics in Beijing. The response is about expressing China’s stance even though policymakers know the impact on the US economy will be limited, he says.
