Trump slaps tariffs on US$200b in Chinese goods in sharp escalation of trade war

WASHINGTON - US President Donald Trump on Monday (Sept 17) defied warnings and escalated the trade confrontation with China, hitting the country with tariffs starting next week on another US$200 billion in imports and threatening to target even more if Beijing retaliates.

Trump said China had refused to change the unfair practices that hurt US businesses and workers.

"For months, we have urged China to change these unfair practices and give fair and reciprocal treatment to American companies," Trump said in a statement.

"These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy," he said. "But, so far, China has been unwilling to change its practices," including theft and force transfer of technology.

Once the new round of tariffs takes effect on Sept 24, punitive duties will be in place on roughly half of the products the US buys from China - its largest source of imported merchandise.

The latest round of imports will face 10 per cent tariffs through the end of the year, and then the rate will jump to 25 per cent. In Beijing, China's Foreign Ministry had already vowed to strike back.

"If the US launches any new tariff measures, China will have to take countermeasures to firmly ensure our legitimate rights and interests," foreign ministry spokesman Geng Shuang told reporters during a regular press briefing on Monday.

But Trump warned that "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." That would mean imposing new taxes on all of the goods the US imports from China.

"Once again, I urge China's leaders to take swift action to end their country's unfair trade practices," Trump said. "Hopefully, this trade situation will be resolved, in the end, by myself and President Xi of China, for whom I have great respect and affection."

SMART WATCHES SPARED

The United States will spare Apple's Watch and other consumer gadgets from the latest round of tariffs on Chinese goods, a senior administration official said in a last-minute reprieve for the technology industry on Monday (Sept 17).

The administration's proposal for the tariffs on US$200 billion (S$247 billion) of products drew protest from technology companies earlier this year, but the final list of taxed devices described by the official avoids many big consumer brand names and products.

Smart watches and devices that use bluetooth wireless communications, the technology behind Apple's AirPods and other products that work with smartphones, will be excluded from the new tariff list.

In an earlier round of tariffs on US$50 billion of goods, the Trump administration removed proposals on flat-panel television sets for the final list in June.

The new list would spare fitness trackers from Fitbit , which had said in a comment letter to regulators that the tariffs would compromise its own investment in the United States.

However, some products that help computer networks operate, such as routers, will remain on the new list, the official said. That could affect smaller technology firms such as Eero, a start-up company that makes home routers and had asked to be exempted from the tariffs.

Altogether about 300 product categories were given reprieves, including some non-tech consumer devices such as bicycle helmets and baby car seats.

Despite the changes, the new tariffs still will cover about US$200 billion worth of additional Chinese goods, as part of an intensifying trade dispute between the world's two largest economies.

Apple and Eero did not respond to a Reuters request for comment, and Fitbit declined to comment. Apple Chief Executive Tim Cook had dinner with US President Donald Trump last month, though neither gave details of discussions.

Apple had said the US tariffs would affect prices for a "wide range" of Apple products, including its Watch, in a letter commenting on administration proposals earlier this month.

"Our concern with these tariffs is that the US will be hardest hit, and that will result in lower US growth and competitiveness and higher prices for US consumers," Apple said in a letter commenting on the proposal.

After Apple's comments, Trump said in a tweet said that there was an "easy solution" for Apple to avoid tariffs. "Make your products in the United States instead of China. Start building new plants now," he tweeted on Sept 8.

Bloomberg reported earlier on Monday that Apple Watches would not face tariffs in the new round.