trending Market Intelligence /marketintelligence/en/news-insights/trending/zmmqigf-jg2_b8qcvm1lkq2 content esgSubNav
Log in to other products

 /


Looking for more?

Contact Us
In This List

As US-China tariffs land, concerns more goods could be targeted

Video

Climate Credit Analytics: Linking climate scenarios to financial impacts

Blog

What’s next in Cloud?

Blog

Global M&A Infographic Q1 2021

Blog

COVID-19 Impact & Recovery: Private Equity


As US-China tariffs land, concerns more goods could be targeted

With $34 billion worth of both U.S. and Chinese goods now subject to 25% tariffs, trade experts are closely watching the Trump administration to gauge the likelihood that additional products will be pulled into the fray.

According to Reuters, President Donald Trump told reporters aboard Air Force One on July 5 that he would explore imposing tariffs on another $500 billion of Chinese goods — a $100 billion increase from his previous threats.

Should it come to fruition, the move would place a total $550 billion in Chinese goods under threat of tariff — $34 billion that went into effect July 6, $16 billion set to go into effect in the coming weeks, plus $500 billion now discussed by the president — outpacing the $505.5 billion of goods the U.S. imported from China in 2017, according to the U.S. Census Bureau.

But the likelihood that more than a half-trillion dollars of Chinese imports will be subject to tariffs is another story, say some experts.

Chris Rogers, research director for Panjiva Research, a division of S&P Global Market Intelligence, does not see the $500 billion target as realistic. Instead, he is monitoring the products included on a list of $200 billion worth of Chinese imports currently under scrutiny by the U.S. Trade Representative's Office, identified in retaliation to China's own $34 billion in reciprocal tariffs that also went into effect July 6.

"That would need to reach deeper into consumer goods territory but could target telecoms network equipment," Rogers said, of the items on the $200 billion list. "That would be fascinating as it would also satisfy the industrial policy aspect of the section 301 review."

The tariffs enacted by the administration against China were a result of a Section 301 investigation into Chinese intellectual property practices, including forced technology transfer from American companies doing business there.

However, the practicality of the tariffs is another matter. Implementing tariffs on hundreds of billions of dollars of goods over several tranches may prove difficult because of the arduous public comment period, said Dan Ikenson, Director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute.

"I think it's just rhetoric," Ikenson said. "He simply can't put a 25% tariff on all imports from China. It has to be more circumscribed. It's a threat — although I've said that about everything that Trump has said, never expecting him to go forward and take us to where we are now."

Ikenson also said he expects more consumer goods — including televisions, computers or smartphones — to be named on the $16 billion list set to go into effect in the coming weeks, although White House trade policy adviser Peter Navarro has said the administration wants to minimize the pain on U.S. consumers while implementing the tariffs.

China has shown no hesitation in quickly retaliating against the U.S., after its Ministry of Finance said it would not "fire the first shot" in what has escalated into a full-blown trade war between the two nations.

The $34 billion batches from each side mainly impact Chinese automotive products, industrial parts and construction equipment, and American soybeans, automobiles, meat and fish, according to a Panjiva analysis.

Though Trump said he expects the next $16 billion batch in "two weeks," both Rogers and Ikenson said they expect it later than that due to the accompanying public comment and hearing period. Rogers said he expects those tariffs perhaps by the end of August.

Rogers instead said he expects the U.S. to either hit all Chinese imports with a credible level of duties that will actually change demand patterns, or target all Chinese imports with a small level of duties that has no impact other than being a tax haul for the Internal Revenue Service.

The Retail Industry Leaders Association expressed concern, saying in a July 6 statement that the price of ongoing trade conflict with China, as well as spats with the European Union and Mexico and Canada, would ultimately be paid by American consumers.

"There is no longer a 'threat' of a global trade war — the battle has begun," the group said. "The recent onslaught of tariffs will jeopardize manufacturing and agriculture jobs in the U.S., while driving up prices on household items."

"It’s impossible to come up with a tariff list of that scope without targeting everyday products, likely including everything from apparel and footwear to consumer electronics and furniture," said Bethany Aronhalt, a spokesperson for the National Retail Federation.