US tariff takes effect on $200B in imports

Talks to resume today

Associated Press

BEIJING

President Donald Trump’s increased tariffs on $200 billion in Chinese imports took effect as of 12:01 a.m. today, escalating tensions with Beijing.

The Trump administration raised the import taxes on those goods from 10 percent to 25 percent.

China has threatened to retaliate if Trump proceeded with his threat to raise those tariffs.

The Trump team is intensifying its trade war with Beijing, which it claims reneged on commitments it had made in earlier trade talks.

The tariff increase took effect even after negotiators for the two sides resumed talks Thursday in Washington.

The talks were due to resume today after wrapping up without any word on progress.

The higher import taxes won’t hit goods that already left Chinese ports before today’s deadline. Only when those shipments complete the three- to four-week voyage across the Pacific to the U.S. would they face the 25 percent tariff.

Fed up with China for breaking past promises, the administration is insisting on provisions designed to force the Chinese to live up to any commitments they make in trade talks that entered an 11th round Thursday.

In fact, top U.S. trade negotiator Robert Lighthizer and Treasury Secretary Steven Mnuchin this week accused the Chinese of already reneging on concessions they’d made earlier in the negotiations.

In retaliation for that alleged backsliding, the United States was poised to dramatically escalate the trade war between the world’s two biggest economies.

And President Donald Trump said he’s preparing to slap 25 percent tariffs on another $325 billion in Chinese imports, covering everything China ships to the United States.

The two countries are battling over U.S. allegations that China steals technology and pressures American companies into handing over trade secrets, part of an aggressive campaign to turn Chinese companies into world leaders in robotics, electric cars and other advanced industries.

The U.S. currently is levying 10 percent tariffs on $200 billion of Chinese imports and 25 percent on another $50 billion.

The Chinese have retaliated by targeting $110 billion in U.S. products and are threatening more sanctions.

When the talks began last year, it appeared that the Chinese might try to appease Trump by agreeing to buy lots of American products – especially soybeans and liquefied natural gas – and put a dent in America’s massive trade deficit with China, a whopping $379 billion last year.

But as the talks dragged on, it became increasingly apparent that “a heap of soybeans isn’t going to get the job done,” said Amanda DeBusk, chairwoman of the international trade practice at the law firm Dechert LLP and a former U.S. Commerce Department official.

Business groups, disappointed that China didn’t fully open up to foreign competition after joining the World Trade Organization in 2001, are pressuring the administration to hold out for a deal that requires China to abandon predatory trade practices, stop subsidizing homegrown companies and treat foreign firms more fairly.

“It was way past time to confront China on many of these problems,” said Michael Wessel, a member of the congressionally created U.S.-China Economic Security Review Commission and president of The Wessel Group consulting firm.

“They’ve been allowed to skate for far too many years.”

Reaching a deal with China to end the tariff war would be only the first hurdle for the Trump administration.

Next would come the hard part: enforcing the agreement.

“The details will matter a lot,” said Dean Pinkert, partner at the law firm Hughes Hubbard & Reed and a former member of the U.S. International Trade Commission.

“In regard to the ‘structural’ issues – including intellectual property and forced technology transfers – what sort of enforcement mechanism will be established? Who gets to judge whether structural commitments are being honored? ‘’

The Trump administration wants Beijing to accept an enforcement mechanism with penalties to make sure it carries out its commitments.