Chinese Goods May Face 25% Tariffs, Not 10%, as Trump Administration’s Anger Grows

Chinese Goods May Face 25% Tariffs, Not 10%, as Trump Administration’s Anger Grows

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WASHINGTON — Several advisers to President Trump, eager to force Beijing back to the negotiating table on trade, are pushing to increase tariffs on $200 billion worth of Chinese goods to 25 percent, up from 10 percent, three people briefed on the matter said.

A decision on whether to impose higher tariffs on Chinese imports like fish, petroleum, chemicals, handbags and textiles has not yet been made. But the potential for a 25 percent tax is being fueled by deep frustration within the Trump administration over its unsuccessful attempts to press China to change its trade practices, as well as by a sharp decline in the value of China’s currency.

Since formal talks between Beijing and Washington fell through in May, Mr. Trump has doubled down on his threat to punish China, saying he was prepared to impose tariffs on all Chinese imports. Beijing has promised to retaliate with its own measures, and both countries have already imposed tariffs on $34 billion worth of each others’ imports.

Mr. Trump privately told advisers this week that he was intent on staying the course on punishing China with additional tariffs, one of the people said. The people requested anonymity because they were not authorized to disclose private conversations.

A recent and rapid depreciation in China’s currency, which helps to make Chinese goods cheaper in foreign markets and buoys exports, has given hard-liners inside and outside the administration an opening to advocate even higher levies. Those pushing for higher tariffs include Peter Navarro, a top White House trade adviser, and Stephen K. Bannon, who left the White House last August, according to people familiar with their thinking.

The Chinese currency fell to a 13-month low against the dollar this week, partly because of market forces but also because the Chinese central bank lowering the peg to which the currency is loosely tied.

Scott Kennedy, a China expert at the Center for Strategic and International Studies, said that ratcheting up tariffs to 25 percent would put substantial pressure on Chinese leaders to devalue their currency even more, to help offset any further losses to exporters. “We can expect further depreciation and vigorous internal debates about a one-off devaluation,” Mr. Kennedy said.

The 25 percent tariffs on $200 billion worth of Chinese goods would come in addition to American levies on $34 billion worth of products that are already in place, and an additional $16 billion that are scheduled to go into effect soon. China has vowed to respond to any trade measures in kind, and it has already imposed its own tariffs on $34 billion worth of American soybeans, pork, electric vehicles and other goods.

The administration maintains that China has long violated international trade practices, including by stealing American intellectual property. It argues that past administrations have failed to sway China and that the United States must be prepared to take a tough stance in order to change its course.

The Americans and the Chinese have been carrying out back-channel talks over how to proceed, but both sides still seem hesitant to express much enthusiasm for formal negotiations. At present, the discussion is mostly centered around whether more formal talks should resume.

Steven Mnuchin, the Treasury secretary, spoke casually with the Chinese delegation at the Group of 20 last week and said that he had been in touch with Liu He, a high-ranking Chinese official charged with negotiating with the United States, to see if he was planning on coming to the meeting. However, China had decided not to send its most senior officials, so no bilateral discussion was held, Mr. Mnuchin said.

While raising tariffs is aimed at hurting China, it is also having an impact on American consumers and businesses that rely on products from China’s factories. Farmers, in particular, have complained that they are bearing the brunt of the trade war as China raises the price on imported soybeans and other agriculture products that it typically buys from farms.

Last week, the Trump administration announced it would offer farmers up to $12 billion in subsidies to help compensate them for losses incurred as a result of the trade measures. But to offer the same level of aid to other industries that have been affected by retaliation from abroad, the U.S. Chamber of Commerce estimated in an analysis that it would cost the administration an additional $27 billion.

A public hearing about the $200 billion list is scheduled for late August, when American companies and individuals will be able to tell the United States trade representative which products they think should be on or off it.

Mark Landler contributed reporting from New York, and Alan Rappeport from Washington.

(Original source)

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