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Looming tariffs on China could impact electronics, cars

Tariffs the U.S. plans to impose July 6 on $34 billion worth of Chinese imports will largely avoid the consumer sector but could still impact cars and electronics, according to an analysis by Panjiva Research, a division of S&P Global Market Intelligence.

The U.S. said on June 15 that it would impose a 25% levy on $50 billion worth of shipments from China, with the first $34 billion worth going into effect on 818 different product categories. China has also threatened to slap a reciprocal 25% tariff on $34 billion worth of U.S. exports but said July 4 that it would only do so after the U.S. duties go into effect.

A second phase of U.S. tariffs on 248 imports from China valued at $16 billion is still subject to a review and comment period.

According to Panjiva, the first batch of imports to be targeted by the U.S. are largely industrial parts, including $1.39 billion of PC components imported in the year ending April 30, as well as $869 million of fuel pumps and $788 million of construction equipment parts. Also impacted would be $1.56 billion of automotive products, according to the analysis.

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Chris Rogers, Panjiva research analyst, said in an interview that consumer products are safe for now, but billions of dollars of additional tariffs threatened by President Donald Trump could impact American shoppers.

"There's plenty of industrial goods that can still be targeted — for example, IT network equipment worth $23 billion imported from China — before consumer goods need to be drawn into the fray," Rogers said. "That said, if President Trump wants to deliver his target of $200 billion of products to be covered with duties it's likely that the consumer will begin to directly pay the price for protectionism."

Rhetoric between the two economic powerhouses has only intensified since Treasury Secretary Steven Mnuchin announced May 20 that the two countries were "putting the trade war on hold." President Donald Trump on June 18 instructed the Office of the U.S. Trade Representative to look into imposing a 10% tariff on an additional $200 billion worth of imports should China slap duties in reprisal on $34 billion of U.S. exports. Should China retaliate against that $200 billion figure, as it has promised it would, the U.S. would look into tariffs on another $200 billion of Chinese goods, Trump has said.

The U.S. tariffs on $50 billion of goods come as a retaliatory measure for a Section 301 investigation into Chinese intellectual property practices and alleged forced technology transfer imposed on American companies doing business there.

The list of Chinese products to be hit in the next $16 billion round of 25% levies, which could be revealed by August, could include semiconductors, with processors and controllers both worth $2.91 billion, according to Rogers, as well as $2.30 billion of Chinese plastics.

"A restriction on purchases of semiconductors makes sense in terms of trying to restrict Chinese industrial development in high tech," Rogers said. "However, outside of memory chips, semiconductors are not commodities, so there's a good chance individual electronics manufacturers could face some significant problems from the list."

China has also threatened to slap a 25% tariff on $34 billion worth of U.S. exports. Those tariffs would target $11.3 billion worth of soybean exports, $9.99 billion of automobiles, $3.77 billion worth of meat and fish, and $2.16 billion of fruit and vegetables, according to Panjiva.

China is also expected to apply tariffs against an additional list of 114 U.S. exports, which Rogers said could focus on $9.73 billion worth of U.S. energy, including $5.88 billion of crude oil, as well as $3.89 billion of American plastics.