American Allies won a tariff battle with Trump on Thursday, but there was no backing down on the presidential order to slap massive tariffs on Chinese products in a move to punish Beijing and equalize trade--despite trade war fears and cries of alarm from the retail corridors.
At 12:30p.m. EST Thursday, Trump signed an order to impose $50 billion worth of tariffs on Chinese imports, taking the ‘America First’ trade policy to a potentially dangerous new level.
The amount represents what U.S. officials say Chinese trade practices have cost American business.
The president has now ordered trade officials to come up with a list of specific good to target within 15 days.
Earlier this week, Trump vowed to make good on his campaign promise to equalize US-China trade relations by slapping a $60-billion tariff package as punishment for stealing and extorting American trade secrets.
That figure was double what Trump’s senior aides had proposed.
Ahead of the announcement, China vowed to respond in equal measure:
"China will certainly take all necessary measures to resolutely defend its legitimate rights and interests," if the United States imposes new restrictions, the Ministry of Commerce said in a statement on Thursday.
Trump also called for new limits on Chinese investment in U.S. technology in a bid to stop China from strategically acquiring new technologies through U.S. investments.
The tariffs are meant to target over 100 products that were specifically developed by the Chinese using stolen trade secrets and other intellectual property infringements, or by forcing companies to hand them over in return for market access in China.
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"The imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the U.S. economy, provoking retaliation; stifling U.S. agriculture, goods and services exports; and raising costs for businesses and consumers," said the letter, signed by leaders of the U.S. Chamber of Commerce, the National Retail Federation, and other groups.
For the EU, however, Thursday was a victory that narrowly avoids a trade war with allies.
At the eleventh hour, Trump backtracked on steel and aluminum tariffs that would have targeted U.S. allies, exempting the European Union after weeks of retributive threats, the most recent which would have seen a 3-percent tax on the turnover of U.S. tech giants.
On Thursday, U.S. Trade Representative Robert Lighthizer said the EU would be exempted from the 25-percent tariff on steel imports and the 10-percent tariff on aluminum, in addition to a tax on European cars Trump had threatened.
This is the second time Trump has backtracked on the steel and aluminum tariffs, earlier exempting Canada, Mexico and Australia.
Earlier this week, the European Commission proposed a new tax rate that would target companies with over $920 million in annual global revenues and over 50 million euros in taxable EU revenues annually. The 3-percent tax would hit giant tech companies like Google and Facebook particularly hard. Amazon’s marketplace transactions would also likely have been affected, despite a proposed exemption for e-commerce groups.
The proposed tax could have earned over $6 billion for EU coffers, but most analysts believed it would have been challenging—at best—to get past EU states and lawmakers.
By Fred Dunkley for Safehaven.com
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