18 June 2018

US and China target each other with 25% tariffs

China has retaliated against the US’s announcement of a 25% tariff on $50 billion of goods from China with its own set of tariffs.

In an announcement made on Friday, June 15, US President Donald Trump said the tariffs are in response to “several unfair practices related to the acquisition of American IP and technology”.

Trump explained: “In light of China’s theft of IP and technology and its other unfair trade practices, the US will implement a 25% tariff on $50 billion of goods from China that contain industrially significant technologies.”

The announcement said the tariffs will cover goods related to China’s strategic plan to “dominate the emerging high-tech industries”, including automobile machinery and industrial equipment.

Last August, Trump ordered US trade representative Robert Lighthizer to assess whether an investigation into Chinese IP theft was necessary.

In March this year, Lighthizer concluded that it was necessary. Trump then identified China as a “particular problem” in relation to unfair trade practices and announced tariffs of up to $60 billion on China.

In response, a trade group representing companies including Apple, Amazon and Google urged Trump to tackle China’s trade practices through an international coalition, instead of focusing on tariffs which “increase costs for American consumers” and “harm the American economy”.

The US and China called a ceasefire in their trade dispute in May, and agreed not to impose tariffs on each other.

However, in the same month, Trump signed a memorandum which said the US would take steps to protect American IP and technology from China’s “discriminatory trade practices”.

In the statement made on Friday, Trump said his “great friendship” with China’s President Xi Jinping is “very important” but trade between the two countries has been “very unfair for a very long time”.

He claimed that these tariffs will prevent further “unfair transfers of American technology and IP to China, which will protect American jobs”.

The tariffs on $34 billion worth of Chinese products will be effective from July 6, with a date for tariffs on the remaining $16 billion worth of products yet to be decided.

In response, China said it would impose tariffs of 25% on 659 US products, equating to approximately $50 billion, China’s state news outlet Xinhua reported.

Agricultural products and vehicles make up 545 of the 659 items (worth $34 billion), and tariffs on them will be effective from July 6. The implementation date for tariffs on the remaining 114 items, which include chemical products and medical equipment, has not yet been set.

The US has not yet commented on China’s response. However, when announcing the tariffs on Friday, Trump said “the US will pursue additional tariffs if China engages in retaliatory measures”.

Earlier this month, the EU submitted a filing at the World Trade Organization, alleging that China is in breach of the TRIPS Agreement and other legal agreements covering IP. China discriminates against foreign IP owners and restricts their ability to protect IP in China, according to the filing.

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More on this story

6 July 2018   US President Donald Trump has said that US tariffs could be applied to more than $500 billion worth of Chinese goods, just two weeks after he announced a 25% tariff on $50 billion of goods from China.
30 August 2018   Cedric Lam, previously a partner at international firm Dorsey & Whitney, has joined Eversheds Sutherland as head of IP in China.
6 November 2018   President Xi Jinping yesterday claimed that China protects the interests of foreign companies and investors by punishing IP infringements and that “openness” is a trademark of the country’s trade practices.