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TWN
Info Service on WTO and Trade Issues (Apr25/08) Geneva, 10 Apr (D. Ravi Kanth) — United States President Donald Trump on 9 April seemingly escalated his trade war, particularly against China, by imposing a 125% tariff on all Chinese goods, while pausing for 90 days his initial reciprocal tariffs imposed on countries that have sought discussions with his administration. However, during the 90-day pause, the US will still impose a “substantially lowered reciprocal tariff of 10%” on all countries, President Trump declared. In response to China’s decision to impose a 50% additional tariff on all American goods entering the Chinese market, which increased the overall tariff to 84% on American goods, President Trump resorted to a seemingly “face-saving” act by raising the overall tariff on Chinese goods from 104% to 125%, an increase of 21%, on allegedly irrational and unsustainable grounds, said people familiar with the development. According to President Trump’s seemingly bizarre reasoning, China has shown “lack of respect” to the “World’s Markets,” even though the world’s markets went into a temporary tailspin following the announcement of the reciprocal tariffs on 2 April. The sudden imposition of reciprocal tariffs has resulted in investors losing trillions of dollars, according to media reports. Yet, President Trump appears to be blaming China for the current downturn in the global markets. “I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” he wrote in his social media website Truth Social on 9 April. While imposing the punitive duties on Chinese products, he said “at some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.” In his latest action in excluding China from the 90-day pause on implementing his reciprocal tariffs, President Trump said: “Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10 percent, also effective immediately.” CHINA STANDS FIRM Severely criticizing President Trump’s decision to impose a 50% tariff that took the overall tariff burden against Chinese goods to 104%, a spokesperson of the Chinese foreign ministry, Mr Lin Jian, asserted: “We will not let anyone take away the Chinese people’s legitimate right to development. We will not tolerate any attempt to harm China’s sovereignty, security and development interests.” “We will continue to take resolute and strong measures to safeguard our legitimate rights and interests,” the spokesperson said. A spokesperson of the Chinese commerce ministry on 9 April announced that Beijing will impose a 50% additional tariff on all American goods in response to the US decision to impose 104% tariffs on Chinese goods. While the US tariff of 104% on all Chinese goods exported to the US came into effect on 9 April, China’s retaliatory duties of 84% against American goods will kick-in on 10 April. In addition to the 84% duty on American goods, China also placed 12 US entities on its export control list on grounds of safeguarding its national security interests. The spokesperson of China’s commerce ministry pointed to six new entities that have been added to its unreliable entity list, including among others Shield AI, Inc; Sierra Nevada Corporation; Edge Autonomy Operations LLC; Group W; and Hudson Technologies Co. Separately, China has also imposed export controls on vital supplies of critical raw materials that are crucial in several hi-tech areas, including the manufacturing of advanced stealth aircraft by US companies like Boeing and Lockheed Martin, said people familiar with the development. China is understood to have filed another complaint with the World Trade Organization’s Dispute Settlement Body (DSB) against the additional 50% tariff imposed by the US on Chinese products, on top of the existing so-called “reciprocal tariff” measures. Beijing argued that “the United States’ tariff measures are a blatant violation of WTO rules,” adding that “the 50% additional tariff measures continue its wrongful practices, and demonstrate its unilateral and bullying nature,” said people familiar with China’s complaint. China stressed that “it would defend its legitimate interests in accordance with WTO rules, and maintain the multilateral trading system and the international trading order,” said people familiar with the development. WTO DG’S WARNING In a rather sharp statement, the WTO’s Director-General Ms Ngozi Okonjo-Iweala expressed deep concern over the worsening trade war between the US and China. She said, “the escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade.” “Our preliminary projections suggest that merchandise trade between these two economies could decrease by as much as 80%,” the DG cautioned. Further, she said “this tit-for-tat approach between the world’s two largest economies – whose bilateral trade accounts for roughly 3% of global trade – carries wider implications that could severely damage the global economic outlook.” Highlighting the substantial risks associated with further escalation, Ms Okonjo-Iweala said that “the negative macroeconomic effects will not be confined to the United States and China but will extend to other economies, especially the least developed nations.” She expressed concern over “the potential fragmentation of global trade along geopolitical lines”, suggesting that “a division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly 7%.” According to the DG, “trade diversion remains an immediate and pressing threat, one that requires a coordinated global response.” Underscoring the need for cooperation and dialogue, she urged the WTO members “to protect the open, rules- based trading system.” +
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