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China Announces New Tariffs On U.S. Goods

Aug 23, 2019
Originally published on August 23, 2019 11:20 am
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NOEL KING, HOST:

China is firing back in the trade war with the United States. It announced new tariffs this morning on U.S. products and opened a new front in the dispute, the U.S. auto industry. Now, this is all happening as the U.S. has levied tariffs on China in an attempt to get it to lower its trade surplus with the United States. NPR's Emily Feng is on the line from Beijing.

Hi, Emily.

EMILY FENG, BYLINE: Hi, good morning.

KING: So tell us about what these new Chinese tariffs cover.

FENG: Well, the tariffs are in two rounds, and in total, they cover $75 billion of U.S. goods in more than 5,000 product categories. They include everything from consumer products to, notably, American cars and car components. The first round of tariffs go into effect September 1, the second December 15. And then on December 15, there will be additional tariffs of 5% to 25% on American cars and car components.

These car tariffs had been suspended in December and then again in April back when relations between the two countries and trade negotiations had been going better. So this announcement that American-made cars and car components are going to be taxed again is a restart of tariffs that had been previously suspended.

The reason why there are these two rounds is that these dates - September 1 and December 15 - match perfectly the schedule for new American tariffs that are going to be imposed on about $300 billion of Chinese goods...

KING: OK.

FENG: ...That President Trump announced in July.

KING: Making my next question to you, Emily, kind of redundant, but has China explicitly said why it's doing this? Have they said this is in response to what the U.S. is up to?

FENG: There are very conflicting narratives. According to China's narrative, the U.S. broke its promises. President Trump and President Xi Jinping had met at the G-20 summit in July in Osaka, Japan, and they had patched things up on the trade front and agreed that they would not announce new tariffs if China made new purchases of U.S. agricultural products. And those agreements were reiterated in July.

But then, nothing happened. China never made a move to buy more agricultural products. And so a week after Shanghai trade talks in July, President Trump said he was going to impose new tariffs. And China has responded. So according to the Chinese, the U.S. broke promises. If you ask the U.S., they say China broke its promises first. They never bought agricultural products.

KING: The U.S. trade negotiators and China's trade negotiators are supposed to meet soon for another round of trade talks. What do these new tariffs mean for those negotiations?

FENG: It means that they're currently deadlocked. The U.S. wants Beijing to buy more U.S. goods and also to get rid of state subsidies to tech sectors in China. Beijing wants the U.S. to get rid of all of its tariffs. Keep in mind the two countries have just announced new tariffs on one another, and China is not buying any more U.S. goods. So all this is not looking great for trade talks that are supposed to be scheduled for September.

Before that face-to-face meeting happens, there is supposed to be a phone call that's scheduled between the top negotiators from both countries. That has not yet happened. And so there is a possibility that trade talks do not happen in September.

KING: And, Emily, just one last thing. We know - we have learned throughout this trade war that a tariff is a tax that is often, in the end, paid by consumers. So to some extent, I would imagine that Chinese consumers will be preparing to pay more for American goods. Is that right?

FENG: They are, but China has prepared its citizens well. Over the last year, state media has put out a lot of content saying that China needs to fight this trade war, that China is capable of being independent. And I think that China is - China has always said that its economy under a centralized leadership is better at lasting - at - is better at withstanding the economic pressures of a trade war.

KING: NPR's Emily Feng in Beijing. Emily, thanks so much.

FENG: Thanks, Noel. Transcript provided by NPR, Copyright NPR.