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Trade war, day 75: Trump’s $200 billion to be met with $60 billion retaliation from China

As we noted in our Access newsletter yesterday (paywall), President Trump issued a statement late on Monday that raised the stakes and narrowed the opening for negotiation in the escalating trade war. The statement begins:

Today, following seven weeks of public notice, hearings, and extensive opportunities for comment, I directed the United States Trade Representative (USTR) to proceed with placing additional tariffs on roughly $200 billion of imports from China. The tariffs will take effect on September 24, 2018, and be set at a level of 10 percent until the end of the year. On January 1, the tariffs will rise to 25 percent. Further, if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.

The Chinese Commerce Ministry said (in Chinese) that it “deeply regretted” the American action, that it had given “new uncertainty” to the recently proposednegotiations, and that China would have “no choice but to implement countermeasures.”

On September 24 at 12:01 p.m. Beijing time, the Ministry added in a separate statement (in Chinese), the countermeasures would go into effect.Those measures — varying tariffs on $60 billion worth of American imports — were first threatened (in Chinese) by the Ministry on August 3.

The much more extensive American tariffs were narrowed down from 6,031 items to 5,745, the U.S. Trade Representative said in a statement, though two omissions in particular caught the attention of media:

No Apple products. Apple had sent a letter to the U.S. Trade Representative on September 5, specifically requesting that the Apple Watch and Airpods be excluded from tariffs. Smartwatches and bluetooth devices were absent from the final list, the SCMP reports. (Perhaps not coincidentally, Apple CEO Tim Cook said today that he’s “optimistic that the two countries will sort this out and life will go on.”)No rare earth metals. About 75 percent of the “niche elements used in smartphones and electric car motors” imported into the U.S. come from China, which controls more than 80 percent of the rare earth metal global supply, the Financial Times says(paywall).Read the full list of tariffed items here.

For more trade war news and analysis in the wake of this major escalation, please click through to SupChina.

—Lucas Niewenhuis


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