Trade wars: US set to impose fresh tariffs on China

The US and China are expected to impose fresh tariffs on $16bn (£12.4bn) of each other’s goods on Thursday as their tit-for-tat trade war rages on.

The second round of tariffs will see a total of $50bn worth of goods from each side that will now be taxed.

Since the opening salvo in July, tensions between the world’s two largest economies have escalated, hurting their companies and economies.

The tariffs come into effect as officials meet for talks in Washington.

They are due to wrap up two days of low-level trade negotiations on Thursday, but few hope for a breakthrough.

US tariffs on $16bn of Chinese goods will come into effect at 12pm Beijing time (0500 BST). The new 25% tax will affect nearly 280 Chinese goods, including chemical products, agricultural equipment, motorcycles and antennas.

China is expected to retaliate with its own 25% tariff on $16bn of US goods including coal, medical instruments, cars and buses.

The move will complete the series of tariffs on $50bn of Chinese goods the US initially set out to tax.

Washington’s plan to proceed with the fresh round of tariffs comes despite testimony to the US Trade Representative’s Office by dozens of American companies and industry groups that oppose the tax.

Many said the new tax would hurt their businesses and warned that they would not be able to absorb another tax without raising prices for US consumers.

However, the $16bn is a drop in the ocean compared to the amount Donald Trump has flagged could be hit with tariffs.

The president said in July he was ready to tax all of the $500bn worth of Chinese imports into the US.

Round three

The US has threatened a third round of tariffs on an additional $200bn of Chinese goods and they could come as soon as next month.

It has since said those products could be hit with a 25% levy – more than double the 10% originally planned.

China has said it would respond with a new tariff on another $60bn of US goods.

But it would be harder for Beijing to match the US threat because its manufacturers export far more products than American businesses send to China.

The US Trade Representative’s Office is holding hearings this week on the likely impact of a third round of tariffs imposed on Chinese goods this year.

For its part, China has accused the US of “unilaterally” heightening tensions between the two economic giants, and has vowed to retaliate.