US President Donald Trump will punish China for alleged theft of American intellectual property by applying tariffs on goods imports worth at least $50 billion.
China is planning to hit back by imposing tariffs on 128 products the country imports from the United States with a value of $3 billion. Some 120 products worth $977 million including fresh fruits, nuts, wine and seamless steel pipes, will be levied a 15% tariff while a 25% tariff will be imposed on eight other products worth $1.992 billion, including pork, pork products and recycling aluminium.
Separately, Europe, Australia and South Korea will be exempted from new tariffs on steel and aluminium imports, the top US trade official Robert Lighthizer said ahead of Friday’s imposition of the taxes.
The tariffs will be first of many trade actions against China which will include restrictions on Chinese investments in the US.
The US faces a tremendous intellectual property theft situation, Trump said.
The new import duties will target industrial sectors where China has sought advantage through unfair acquisition or forced technology transfer from US companies.
Stocks fell on Wall Street with Dow Jones Industrial Average down about two per cent even before the announcement of the tariffs on Friday.
Lighthizer will identify and publish a proposed list of products that could be subject to tariffs. He will also take action against China at the World Trade Organization for preventing US companies from licensing their technology in China.
US Treasury will develop new proposals to increase safeguards on investments that could compromise US national security.
The US actions come after years of efforts to encourage China to end the alleged unfair practices through talks. Those talks failed under the Bush and Obama administrations, White House Trade Advisor Peter Navarro told reporters.
Trump did everything to encourage Beijing to cooperate with requests to open Chinese markets and end unfair practices. When China’s wall of defiance blocked all such efforts, Trump decided to move forward.
Asked whether Friday’s US announcement will spark a trade war with China, Navarro said Beijing will not retaliate since it has benefited immensely from trade ties with Washington.