US President Donald Trump has geared up pressure on China for trade concessions by proposing a higher 25% tariff on $200 billion worth of Chinese imports. The EU, meanwhile, hailed a near three-fold jump in soybean imports from the US, attributing the surge to “market forces” and not last week’s highly touted trade deal with Trump.
The data on Wednesday (1 August) from the Commission showed that EU imports of soybeans from the US increased by 283% between July 2017 and July this year. US soybeans accounted for 37% of total imports, compared to 9% in July last year.
“The European Union can import more soybeans from the US and this is happening as we speak,” said Commission President Jean-Claude Juncker in a statement, a week after both met at the White House to defuse a deepening trade row between the two major economies.
A vaguely worded statement after the talks said both sides would work to reduce barriers and increase trade in a range of products including soybeans. The mention of soybeans in the trade truce, which stopped Trump from hitting Europe with punishing auto tariffs, was a key condition set by Washington.
“The target and the objective is to increase soya beans imports from the US and this is what is effectively happening due to market forces,” EU Commission spokeswoman Mina Andreeva told reporters in Brussels.
“We are not forcing private companies to buy more soya beans. We let the market forces develop which is working as you see in the report today,” she said. The data will serve to assuage Trump who immediately after the talks boasted that Europeans “would start buying soybeans from our great farmers immediately.”
In reality, the surge is due to Chinese tariffs on US soybeans set as retaliation against Trump’s decision to impose hefty duties on $34 billion worth of Chinese machinery, electronics and high-tech gear. The development has reshaped the global market for soybeans, diverting produce from Brazil – originally intended for Europe – towards China, slashing the price of US exports.
The EU’s insistence on “market forces” also addresses concerns in Europe where Juncker’s promise to Trump on soybeans rankled farm-producing member states, especially France. Sowing confusion, once back in Brussels EU officials firmly denied agriculture was part of the White House agreement, all while their top US counterparts in Washington assured that it was.
Trump turns up the heat on China
Meanwhile, Trump intends to apply a higher tariff rate to a list of goods valued at $200 billion, identified by US Trade Representative Robert Lighthizer last month as a response to China’s retaliatory tariffs on an initial round of US tariffs on $34 billion worth of Chinese electronic components, machinery, automotives and industrial goods.
Lighthizer said Trump directed the increase from a previously proposed 10% duty because China has refused to meet US demands and has imposed retaliatory tariffs on US goods.
“The increase in the possible rate of the additional duty is intended to provide the administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens,” he said in a statement.
Trump has ultimately threatened tariffs on over $500 billion in Chinese goods, covering virtually all US imports from China.
China said on Wednesday that “blackmail” would not work and that it would hit back if the United States takes further steps hindering trade, including applying the higher tariff rate. “US pressure and blackmail won’t have an effect. If the United States takes further escalatory steps, China will inevitably take countermeasures and we will resolutely protect our legitimate rights,” Chinese Foreign Ministry spokesman Geng Shuang told a regular news briefing.
Investors fear an escalating trade war between Washington and Beijing could hit global economic growth, and prominent US business groups, while weary of what they see as China’s mercantilist trade practices, have condemned Trump’s aggressive tariffs.
Derek Scissors, a China scholar at the American Enterprise Institute in Washington, said a 25% tariff rate is more likely to shut out Chinese products and shift American supply chains to other countries, as a 10% duty could be offset by government subsidies and weakness in China’s yuan currency.
“If we’re going to use tariffs, this gives us more flexibility and it’s a more meaningful threat,” he said, adding that Trump’s pressure strategy will not work if he does not resolve trade disputes with US allies such as the European Union, Mexico and Canada.
But the move drew swift condemnation from US business lobby groups worried that tit-for-tat tariffs would start to hamper economic growth. “Escalating tariffs against China is the wrong approach to address legitimate concerns US businesses have with China’s harmful practices,” said Myron Brilliant, head of international affairs for the US Chamber of Commerce.
“Each tariff escalation leads to further retaliatory action from China – ultimately inflicting even more harm on American businesses, workers, farmers, ranchers, and consumers.”