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China hits back at US with tariff hike

Beijing, Nov. 20 (Reuters): China will raise tariffs on some American imports, the commerce ministry said today, in a step that comes just days after a fresh trade spat sparked by a US move to cap imports of selected Chinese textiles.

“The Chinese side will raise import tariffs on some commodities imported from the US and we are currently studying relevant plans,” vice commerce minister Ma Xiuhong told the official Xinhua news agency.

Putting some distance between the announcement and the US move on textiles, Ma said the new tariffs were in response to US duties on steel imports enacted a year and a half ago — duties that the World Trade Organisation (WTO) has recently ruled illegal. She did not elaborate and a ministry spokesperson said details of the new duties were still being worked out.

Simmering tensions between the world’s biggest and fifth biggest trade nations flared on Tuesday when Washington said it would cap imports of Chinese knit fabrics, bras and gowns.

Angry at the move, China summoned the US ambassador to Beijing late yesterday, telling him it was “shocked and dissatisfied”, Xinhua said.

Harsher words followed as the official China Daily accused the US of cheap point-scoring, and said the imports caps would not fix the huge trade imbalance.

“The cheap political points the Bush administration scored by touting trade protectionism will prove costly for US consumers as well as global trade,” the newspaper said today.

Earlier today, a commerce ministry spokesperson said China could retaliate but wanted to take part in talks that are part of the process for invoking the tariff measures included in China’s entry package for the WTO.

“I think we will definitely go into such talks to make clear our position,” the spokesperson said. He gave no further details.

A foreign ministry spokesperson said the problem should be resolved through friendly negotiation. “We also oppose problems that occur in the field of trade relations being politicised,” he said.

The US move appeared to blindside China, said Tai Hui, an economist with Standard Chartered in Hong Kong.

“The fact that China bought 30 Boeing jets from the US plus GE engines, that established some goodwill,” Hui said, referring to a $1.7 billion aviation deal signed earlier this month.

After the import caps — which will affect less than 5 per cent of Chinese textile exports to the US — were announced, China postponed two delegations to buy US soybeans, wheat and cotton.

China said the cancellations were due to visa and scheduling problems, but many traders and analysts said they suspected links to the fresh trade row.

The delegations had been part of a Chinese effort to soothe tensions over a yawning trade surplus with the US, which US estimates see growing 20 per cent this year to $120 billion.

The China Daily said Washington had “stubbornly resorted to short-sighted protectionism”.

“Mounting US protectionism against China is by no means a solution to the exploding US trade deficit,” it said.

The US textile industry says it has lost more than 300,000 jobs since early 2001 and has blamed much of that on soaring imports from China, which has emerged as a global textile force since it joined the World Trade Organisation in December 2001.

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