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China lowers tariffs for America’s trade rivals

07/01/2019
Graphic News

July 1, 2019 -- U.S. President Donald Trump’s trade war with China has led President Xi Jinping to cut “most favoured nation” (MFN) tariffs for Washington’s commercial rivals while giving them improved access to China’s 1.4 billion consumers.

Between January 2018 and June 2019, China’s average MFN tariff rose from eight per cent to 20.7 per cent for goods imported from the U.S., yet fell to 6.7 per cent for the rest of the world.

Beijing’s two-pronged response to Washington’s trade dispute has resulted in a considerable cost disadvantage for U.S. companies relative to both Chinese firms and firms in third countries, according to the Peterson Institute for International Economics, a U.S.-based think tank.

Data from the Maine International Trade Center shows that the state’s lobster exports to China plunged by 84 per cent in the wake of retaliatory tariffs by Beijing. On the other hand, Canada’s lobster exports to China almost doubled to 12 million kilograms as it benefited from U.S. lobsters facing a 25 per cent tariff.

Since last July, China has retaliated against $110 billion of U.S. exports in response to President Trump imposing tariffs on $250 billion worth of Chinese goods. In June, China’s average MFN rate surged to 20.7 per cent in blowback after Trump raised duties from 10 per cent to 25 per cent on $200 billion of Chinese exports.

Trump and Xi agreed to resume trade talks at the G20 summit in Osaka, Japan on June 29. Trump also reversed his ban on U.S. companies selling to the Chinese tech giant Huawei, citing national security risks -- a significant concession.

Few seem optimistic that the 12th round of trade negotiations between the U.S. and China will be any more productive than the previous 11 have been. However, Trump may be motivated to compromise now that he’s campaigning for re-election.


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