US-based analyst Gary Shapiro warned the “disastrous” decision would end up hitting US consumers in the pocket as retailers are forced to increase prices to cover their costs, while investment bank Goldman Sachs said time was rapidly running out to find a solution. The new measures took effect today, after two fruitless days of talks between top US and Chinese negotiators aimed at rescuing a faltering deal to end the 10-month dispute between the world’s two largest economies. China’s Commerce Ministry said it “deeply regrets” the US decision, saying it would take necessary countermeasures.
Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin talked for 90 minutes on yesterday Thursday and were expected to resume talks today.
The Commerce Ministry said that negotiations were continuing, and that it “hopes the United States can meet China halfway, make joint efforts, and resolve the issue through cooperation and consultation”.
However, with no action from the Trump administration to reverse the increase as negotiations moved into a second day, US Customs and Border Protection imposed the new 25 percent duty on affected US-bound cargoes leaving China after 12:01 am EDT (0401 GMT) today.
Goods in more than 5,700 affected product categories which left Chinese ports and airports before midnight will be subject to the original 10 percent duty rate, a CBP spokeswoman said.
The grace period was not applied to three previous rounds of tariffs imposed last year on Chinese goods, which had much longer notice periods of at least three weeks before the duties took effect.
Goldman Sachs wrote in a note: “This creates an unofficial window, potentially lasting a couple of weeks, in which negotiations can continue and generates a ‘soft’ deadline to reach a deal.”
Stressing the urgency of the situation, the bank added: “Given this detail, downside to sentiment might be slightly more muted than if the tariff increase came with a ‘hard’ deadline. This also leaves an opportunity for the two sides to reach an agreement in the next couple of weeks.”
Mr Trump gave US importers less than five days notice about his decision to increase the rate on the $200bn category of goods to 25 percent, which now matches the rate on a prior $50 billion category of Chinese machinery and technology goods.
The biggest Chinese import sector affected by the rate hike is a $20 billion-plus category of internet modems, routers and other data transmission devices, plus about $12 billion worth of printed circuit boards used in a huge range of US-made products.
Furniture, lighting products, auto parts, vacuum cleaners and building materials are also high on the list of products subject to the higher duties.
US stock futures fell and Asian shares pared gains after the announcement.
Mr Shapiro, chief executive of the Consumer Technology Association said the tariffs would be paid by American consumers and businesses, not China, as Mr Trump has claimed.
“Our industry supports more than 18 million US jobs – but raising tariffs will be disastrous.
“The tariffs already in place have cost the American technology sector about $1 billion more a month since October.
“That can be life or death for small businesses and startups that can’t absorb the added costs.”
Economists and industry consultants have said it may take three or four months for American shoppers to feel the pinch from the tariff hike but retailers will have little choice but to raise prices on a wide range of goods to cover the rising cost of imports before too long, according to economists and industry consultants.
Even without the trade war, China-US. relations have continued to deteriorate, with an increase tensions between the two countries over China’s military build-up in the South China Sea, Taiwan, human rights and China’s plan to re-create the old Silk Road, called the Belt and Road Initiative, a massive programme of international investment.