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Latest US and Chinese tariff hikes take effect in trade war

All told, more than two-thirds of the consumer goods the United States imports from China now face higher taxes.

Jennifer Lee, whose family owns a shoe store in San Francisco, with some fo the goods imported from China (Terry Chea/AP)
Jennifer Lee, whose family owns a shoe store in San Francisco, with some fo the goods imported from China (Terry Chea/AP)

By Christopher Rugaber, Associated Press

The United States and China have gone ahead with their latest tariff increases on each other’s goods, potentially raising prices Americans pay for some clothes, shoes, sporting goods and other consumer items.

The 15% US taxes apply to about 112 billion dollars (£92 billion) of Chinese imports.

All told, more than two-thirds of the consumer goods the United States imports from China now face higher taxes.

The administration had largely avoided hitting consumer items in its earlier rounds of tariff hikes.

But with prices of many retail goods now likely to rise, the administration’s move threatens the US economy’s main driver: consumer spending.

As businesses pull back on investment spending and exports slow in the face of weak global growth, American shoppers have been a key bright spot for the economy.

As a result of President Donald Trump’s higher tariffs, many US companies have warned that they will be forced to pass on to their customers the higher prices they will pay on Chinese imports.

Some businesses, though, may decide in the end to absorb the higher costs rather than raise prices for their customers.

In China, authorities began charging higher duties on American imports at midday on Sunday, according to employees at customs offices in Beijing and the southern port of Guangzhou.

Tariffs of 10% and 5% apply to items ranging from frozen sweet corn and pork liver to marble and bicycle tyres, the government announced earlier.

After Sunday’s tariff hike, 87% of textiles and clothing the United States buys from China and 52% of shoes will be subject to import taxes.

Chinese investors monitor stock prices (Mark Schiefelbein/AP)

On December 15, the Trump administration is scheduled to impose a second round of 15% tariffs – this time on roughly 160 billion dollars (£131 billion) of imports.

If those duties take effect, virtually all goods imported from China will be covered.

The Chinese government has released a list of American imports targeted for penalties on December 15 if the US tariff hikes take effect.

In total, Beijing says Sunday’s penalties and the planned December increases will apply to 75 billion dollars (£61 billion) of American goods.

Washington and Beijing are locked in a war over US complaints that China steals US trade secrets and unfairly subsidises its own companies in its drive to develop global competitors in such high-tech industries as artificial intelligence and electric cars.

To try to force Beijing to reform its trade practices, the Trump administration has imposed import taxes on billions of dollars’ worth of Chinese imports, and China has retaliated with tariffs on US exports.

Mr Trump has insisted that China itself pays the tariffs.

But in fact, economic research has concluded that the costs of the duties fall on US businesses and consumers.

Mr Trump had indirectly acknowledged the tariffs’ impact by delaying some of the duties until December 15, after holiday goods are already on store shelves.

A study by JP Morgan found that Mr Trump’s tariffs will cost the average US household 1,000 dollars (£822) a year.

That study was done before Mr Trump raised the September 1 and December 15 tariffs to 15% from 10%.

The president has also announced that existing 25% tariffs on a separate group of 250 billion dollars (£205 billion) of Chinese imports will increase to 30% on October 1.

That cost could weaken an already slowing US economy.

Though consumer spending grew last quarter at its fastest pace in five years, the overall economy expanded at just a modest 2% annual rate, down from a 3.1% rate in the first three months of the year.

The economy is widely expected to slow further in the months ahead as income growth slows, businesses delay expansions and higher prices from tariffs depress consumer spending.

Companies have already reduced investment spending, and exports have dropped against a backdrop of slower global growth.

Americans have already turned more pessimistic in light of the trade war.

The University of Michigan’s consumer sentiment index, released on Friday, fell by the most since December 2012.

“The data indicate that the erosion of consumer confidence due to tariff policies is now well under way,” said Richard Curtin, who oversees the index.



From Belfast Telegraph