China yesterday imposed tariffs on 128 United States imports worth US$3 billion, including fruit and pork in retaliation against U.S. duties on steel and aluminum that Beijing said "seriously infringed" on Chinese interests. And that's hard to predict, because it depends not only on China's assessment of what they're likely to gain - and lose - from additional tariffs but also their best guess about how Trump himself will play this tariff-escalating game.
The Chinese government on Monday announced retaliatory tariffs on U.S. exports, including pork and fruit, but seafood escaped for the time being, according to the Washington Post. An even bigger concern is intellectual property theft which was identified as the main reason for the tariffs. A USA fact sheet says the administration will take public comments for 30 days on the proposed action.
US Trade Representative Robert Lighthizer has said that preserving America's technological edge is "the future of the US economy".
In the meantime, Treasury Secretary Steven Mnuchin has said the United States and China are talking behind the scenes in hopes of preventing an escalation.
China could respond by targeting American commercial interests uniquely dependent on the Chinese market: the aircraft giant Boeing, for example, and soybean farmers.
The levies are in response to tariffs of 10 percent on aluminium and 25 percent on steel that have also angered USA allies.
The Customs Tariff Commission of the State Council has chose to impose a tariff of 15 per cent on 120 items of products imported from the U.S. including fruits and related products, and a tariff of 25 per cent on eight items of imports including pork and related products from the country, according to a statement posted on the ministry website. The products amount to about $3 billion a year, a relatively small number.
The tariffs are causing "panic buying", said one executive. In addition to imposing additional tariffs on steel and aluminum from China and other countries, Trump has threatened to put protective duties on other Chinese-made products worth $60 billion.
Trump has temporarily suspended the tariffs for the European Union as well as Argentina, Australia, Brazil, Canada, Mexico and South Korea.
"We are curious about what the USA side really wants", he said, "and wonder whether the United States can tolerate the consequences".
"We're in a trade slap-fight right now", not a trade war, said Derek Scissors, resident scholar and China specialist at the conservative American Enterprise Institute. Tariffs run the risk of providing China to take further destructive actions against American manufacturing, Timmons said.
Among the states that likely will be hit hardest by Beijing's tariffs are Illinois, Iowa, Minnesota, Nebraska and IN, along with others like North Carolina and Oklahoma, all big pork producers.
But Sen. Elizabeth Warren, D-Mass., who has been visiting Beijing, said Saturday that Chinese officials she met, including Liu, "have not deviated from their talking points" about the Trump administration's tariffs.
The US ran a US$375.2 billion deficit with China a year ago. But economists have cautioned that tariffs are unlikely to achieve that goal and risk hurting economic growth instead.
Those products could be imposed with a 15% duty, whereas a tariff of 25% could be levied on import of pork and aluminium scrap, with effective from April 2, the statement said.
Arthur Kroeber, a founding partner at economic research firm Gavekal, predicted in a note to clients late last month that the next round of Chinese measures will focus on U.S. agricultural exports from predominantly Trump-voting states.