Since last year, the Trump Administration has imposed tariffs ranging from 10 percent to 25 percent on nearly all imports of Chinese goods. Now, the Administration is set to impose an additional $300 billion of tariffs on Chinese goods as of September 1, 2019, that will cover all remaining goods, the so-called “List 4” products.
On August 1, 2019, the president announced that a 10 percent tariff will go into effect on the remaining $300 billion worth of imports from China, which we previously blogged about here. The president previously delayed imposing tariffs on “List 4” goods after a conversation with the Chinese president at the G20 leaders summit back in June. This new announcement comes on the heels of talks regarding a trade deal between U.S. and Chinese government officials last week in Shanghai. Previous reports indicated that a deal was close to being finalized several months ago, however, the president has stated that the Chinese decided to re-negotiate the deal prior to signing. Following last week’s dialogue, the two governments agreed to meet again in September to continue discussing a potential trade deal. This means, of course, that absent a change to that timeline there is not another opportunity for the two governments to negotiate prior to the imposition of new duties on September 1.
In response, China announced on Friday that it would impose counter-measures if and when the additional tariffs go into effect on September 1. While no details about the nature of counter-measures was mentioned, a statement released by the Chinese Ministery of Commerce indicates that the Chinese believe that additional tariffs is a violation of the agreement between the two countries’ presidents at the G20 summit in June. Then today, China devalued the yuan to a significantly low point (letting it fall below its 7-to-1 ratio with the U.S. dollar) in what is certainly a response to last week’s announcement regarding the new tariffs. The Chinese government has also reportedly asked Chinese state-owned companies to discontinue purchasing U.S. agricultural products, an issue that is wrapped up in the ongoing U.S.-Chinese trade deal negotiations. Given that the administration has only announced but not yet imposed the new wave of tariffs, this may not be the end of China’s retaliatory measures.