US-China trade war: New tariffs come into effect
The new tariffs on $110 billion worth of Chinese goods and $75 billion worth of American goods will take effect from September 1 as previously announced by both sides.
According toBloomberg, the US plan to increase tariffs on 300 billion USD worth of goods imported from China is still taking place as announced by US President Donald Trump, despite criticism from analysts and US businesses.
About $110 billion worth of Chinese clothing, shoes, and groceries exported to the US will be subject to a 15% tax, instead of 10%, starting today (September 1). The list of products subject to the tax is 112 pages long. Other items such as phones, computer monitors, and computers will be subject to a 15% tax starting October 1.
Meanwhile, China’s retaliatory tariffs of 5% to 10% on $75 billion worth of US goods also took effect on September 1. Crude oil is also subject to tariffs, with an estimated 1,700 out of 5,078 US-origin items being subject to the new tariffs. The remaining items will be subject to a 10% tariff from December 15.
The decision comes as US-China trade negotiators are scheduled to meet this month. "We're going to win this fight," Trump told reporters at the White House on Friday.
JP Morgan estimates the latest tariffs on Chinese goods will hit consumers hard and cost the average American household $1,000 a year. More than 160 industry groups have condemned the new US tariffs and the escalation of the trade war.
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Chinese President Xi Jinping and US President Donald Trump.Photo: AP |
More than 160 US business associations wrote a letter to Mr. Trump, condemning the plan to increase tariffs. Not only was this proposal not approved, Mr. Trump also criticized them for not proactively responding to trade policies that he said were "aimed at governing unfair players."
Still, forecasts of declining revenue for U.S. companies in the second half of the year show the impact of the trade war. Shares of American Outdoor fell 22% at the close of trading on Friday. Best Buy and Abercrombie & Fitch Co. forecast revenue declines of 8% and 15%, respectively, due to sales declines caused by tariffs in the trade war.
In public hearings held by the Office of the US Trade Representative in June, US companies warned the Trump administration that the new tariffs would increase costs and disrupt supply chains.
"Increased tariffs on Chinese goods to the US have pushed importers to compete for alternative sources of supply. This has increased costs and product prices," said Bryan Wolfe, a representative of Ascena Retail Group.
Businesses and investors are increasingly concerned that a prolonged trade war could fuel the longest expansion in history, with the first key recession signal in more than a decade emerging in mid-August.
Elsewhere, U.S. stocks had a volatile day before the close on Friday as investors weighed the impact of import tariffs on more American households. U.S. consumer sentiment has fallen to its lowest level since the start of Trump’s term. The University of Michigan’s consumer confidence index fell more than 8% in a month, from 98.4% in July to 89.8% in August.
