China hiked its tariffs on imports of American products by another 41 per cent to 125 per cent on Friday in an escalating trade war between the world’s two largest economies, warning it would price US goods out of the Chinese market.
Calling US President Donald Trump’s ramping up of tariffs on China on Thursday to 125 per cent “unilateral bullying and coercion,” the Chinese Finance Ministry said in a statement that the rate on US goods would be increased from 84 per cent to 125 per cent, effective Saturday.
“The United States’ imposition of abnormally high tariffs on China seriously violates international trade rules, basic economic laws and common sense, and is a completely unilateral bullying and coercion practice,” said the ministry.
China, however, said continuing rounds of tariff rates ever higher would be pointless as tariffs have ramped up exponentially in recent weeks particularly since Trump unveiled his “Liberation Day” reciprocal tariffs on US trading partners April 2 with the rate being applied by both sides almost quadrupling.
“Given that at the current tariff level, there is no market acceptance for US goods exported to China, if the US continues to impose tariffs on Chinese goods exported to the United States, China will ignore it,” said the Finance Ministry.
The White House confirmed to CNBC that the effective tariff on Chinese goods could be as high as 145 per cent for some categories of goods because the 125 per cent rate was on top of 20 per cent tariffs already in place — ten per cent announced on February 4 and a further ten per cent on March 4 – in parallel with a separate 20 per cent tariff aimed at pressuring China to help stem fentanyl flows into the United States.
Calling them the highest tariffs in 80 years, the Tax Foundation’s Center for Federal Tax Policy warned Trump’s 145 per cent tariff would halt trade across the Pacific in its tracks.
“It depends on how narrowly the tariff is applied or how broadly it’s applied, but generally if you get north of a triple-digit tariff, you are cutting off most trade,” said Erica York, the centre’s vice president of federal tax policy. “There may still be some things without any substitutes that companies just have to foot the bill, but for the most part, that cuts it off.”
Chinese President Xi Jinping responded Friday by saying a tariff war could have “no winners” and calling on the European Union to join forces with China to keep globalisation alive and stand up to “unilateral bully practices.”
“Going against the world will only lead to isolation,” he adds.
Xi made the comments after holding talks in Beijing with Spanish Prime Minister Pedro Sanchez. (UPI)
