The United States has announced plans to impose an additional 10% tariff on a further US$200B worth of Chinese imports.
The Office of the US Trade Representative (OTR) has announced this week: “On 20 June 2018, the US Trade Representative provided notice of an initial action in the Section 301 investigation of the acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation.
“The initial action was the imposition of an additional 25% ad valorem duty on products of China with an annual trade value of approximately US$34B, effective 6 July 2018. The 20 June notice also sought public comment on another proposed action, in the form of an additional 25% ad valorem duty on products of China with an annual trade value of approximately US$16B.
“The public comment process in connection with the proposed additional action is ongoing. On 6 July 2018, China responded to the initial action by imposing increased duties on goods of the United States.
“In light of China’s decision to respond to the investigation by imposing duties on US goods, the Trade Representative proposes a modification of the action taken in this investigation. The proposed modification is to maintain the original US$34B action and the proposed US$16B action, and to take further action in the form of an additional 10% ad valorem duty on products of China with an annual trade value of approximately US$200B.”
The new list runs to over 6,000 items, including foodstuffs and processed food products, fruit and produce, plus fish and other items the US imports from China in large quantities.
Industrial products listed in the latest US announcement include automotive batteries, spark plugs, starter motors and ignition system components, and several classes of tyres (including industrial equipment tyres). Portal or pedestal job cranes are also listed, along with truck mounted crane units.
“In developing the list of tariff subheadings included in this proposed supplemental action, trade analysts considered products from across all sectors of the Chinese economy. The tariff sub-headings considered by the analysts included subheadings that commenters suggested for inclusion in response to the 6 April notice,” the OTR noted.
“The selection process took account of likely impacts on U.S. consumers, and involved the removal of subheadings identified by analysts as likely to cause disruptions to the U.S. economy, as well as tariff lines subject to legal or administrative constraints.”
Comments on the list are due by 27 July 2018. There will be a public hearing in Washington, scheduled for 20-23 August. US consumers will not see the price of Chinese-made consumer goods in the new listing rise until towards the end of the year (if the tariffs proceed).
When it comes to Chinese tariffs agenised the US, soya beans are a key agricultural commodity, likely to cause a major trade shift for the crop. Brazil, the world’s largest soya bean producer, is likely to be the biggest winner as it fills the gap left by the US.
However, according to Peter San, chief shipping analyst at shipping association BIMCO, Brazil is not in a position to expand its soya production quickly enough to fully replace US production, despite a steady growth in Brazil’s output.
Speaking during the Bulk Seminars at TOC Europe last month, Sand told delegates: “Imagine that Brazil could step in and completely take over the US share of Chinese imports of soya beans. It may bring about something positive for the shipping industry, because there is at least if you go by US exports out of the Gulf, via the Panama Canal, and to China, an upside in the distances if you source from S America, take it into mainland China instead.
“So, will this tiny and potentially positive thing actually benefit the shipping industry? Well, according to the latest figures, it seems as if Brazil is growing it exports but not by far enough. We are not talking about a complete substitution here; we had a good soya bean harvest in Brazil, but not good enough to be able to step in to replace all US exports.
“It is interesting to follow soya beans in particular, because it is a very seasonal cargo. We will only see how much the trade war impacts soya bean exports out of the US come the third and fourth quarter, because that is when the Americans are about to ship the soya beans.
“The Brazilian season is right now, so we will get not only a slim picture, but a clear picture into how much China is actually going to be buying from somewhere else, or how much they need to buy from the US, including the tariff come Q3/Q4.”