BEIJING – The United States and China went ahead with tariff hikes on billions of dollars of each other’s automobiles, factory machinery and other goods Thursday in an escalation of a battle over Beijing’s technology policy that companies worry will chill global economic growth.
The increases came as envoys met in Washington for their first high-level talks in two months. They gave no sign of progress toward a settlement over U.S. complaints that Beijing steals technology and its industry development plans violate Chinese free-trade commitments.
The 25 per cent duties, previously announced, apply to $16 billion of goods from each side including automobiles and metal scrap from the United States and Chinese-made factory machinery and electronic components.
In the first round of tariff hikes, U.S. President Donald Trump imposed 25 per cent duties on $34 billion of Chinese imports on July 6. Beijing responded with similar penalties on the same amount of American goods.
The Chinese government criticized Thursday’s U.S. increase as a violation of World Trade Organization rules and said it would file a legal challenge.
A foreign ministry spokesman, Lu Kang, declined to give details of the Washington talks.
“We hope the U.S. side will get along with us to strive for a good result from the talks with a reasonable and practical attitude,” said Lu.
Beijing has rejected U.S. demands to scale back plans for state-led technology development that its trading partners say violate its market-opening commitments. American officials worry they might erode the United States’ industrial leadership.
With no settlement in sight, economists warn the conflict could spread and knock up to 0.5 percentage points off global economic growth through 2020.
Ahead of the Washington talks, Chinese state TV mocked President Donald Trump with a sarcastic video posted on the YouTube and other social media pages of its international arm, China Global Television Network.
“You are great,” said a presenter on the nearly three-minute-long English-language clip, reading a letter that pays a satirical tribute to Trump.
“On behalf of doctors, thank you for pointing out the need to wean off American goods like bourbon and bacon,” the presenter says, referring to products on which China imposed retaliatory tariffs.
The video appeared to have been removed Thursday from CGTN’s social media accounts.
Trump has proposed another possible round of tariff hikes imposing 25 per cent increases on an additional $200 billion of Chinese goods. Beijing issued a $60 billion list of American imports for retaliation if Washington goes ahead with that.
That smaller target list reflects the fact that Beijing is running out of American goods for retaliation due to their lopsided trade balance.
China’s imports from the United States last year totalled about $130 billion. That leaves about $20 billion for penalties after tariffs already imposed or planned on a total of $110 billion.
Chinese authorities have said they will take “comprehensive measures,” which companies worry could mean targeting operations of American businesses in China for disruption.