The Trump administration ramped up pressure for trade concessions from Beijing this week by proposing a higher 25 per cent tariff on $270 billion worth of Chinese imports.
The US trade deficit recorded its biggest increase in more than 1-1/2 years in June as the boost to exports from soybean shipments faded and higher oil prices lifted the import bill.
Erin Ennis, senior vice president of the U.S. China Business Council, said a 10 percent tariff on these products is already problematic, but more than doubling that to 25 percent would be much worse.
Until now, China has matched United States tariff moves but not sought to escalate them, which has also probably also emboldened the White House to think it holds a stronger position on the escalation ladder.
Trump initially threatened to levy 10 percent on an additional $200 billion but that figure may now rise to 25 percent, sources told the Washington Post and Bloomberg. Those tariffs have already started to affect some businesses, though only a small fraction of the US economy is experiencing consequences.
"Escalating tariffs against China is the wrong approach to address legitimate concerns U.S. businesses have with China's harmful practices", said Myron Brilliant, head of global affairs for the U.S. Chamber of Commerce.
Mickey Kantor, who was US trade representative under President Bill Clinton, warned that a trade war with China will take a toll on a USA healthy economy that from April through June registered the fastest growth since 2014.
Washington is preparing to also impose tariffs on an extra $16 billion of goods in coming weeks, and Trump has warned he may ultimately put them on over half a billion dollars of goods - roughly the total amount of U.S. imports from China past year.
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In Australia, they said, "get stuffed, there is no way I am bringing my bag in and I'm not going to pay 15 cents". The supermarket was criticised by shoppers and environmental groups following Wednesday's announcement.
Its threat of tariffs on the entire $500 billion or so worth of goods imported from China still stands.
It has typically taken several weeks after the closing of public comments for tariffs to be formally activated.
The 25% tariffs would apply to the same products proposed in July.
China is willing to resolve differences with the United States on an equal footing, the Chinese Government's top diplomat said after meeting US Secretary of State Mike Pompeo, but added they did not address their trade war too specifically.
"The data breakdown indicates that an uncertain demand outlook amidst the U.S".
China's Foreign Ministry spokesman Geng Shuang reiterated at a regular news briefing in Beijing that the United States' efforts at "blackmail" would fail.
Investors fear an escalating trade war between Washington and Beijing could hit global growth, and prominent USA business groups have condemned Trump's aggressive tariffs. Visit MarketWatch.com for more information on this news.
The proposal would require a more robust justification from the Department of Defense for "Section 232" tariffs such as those imposed on steel and aluminum imports and those now under consideration for autos. He gave no details of possible retaliatory measures.