China vows new $60 billion tariffs against US

The Chinese government says it will respond to the latest US tariff threat with fresh tariffs of its own totaling $60 billion (€51.78 billion), the country's finance ministry announced on Friday.

Earlier this week, the Trump administration proposed tariff rates of 25 percent, rather than the previously touted 10 percent, on $200 billion worth of Chinese goods — the latest round in the ongoing trade conflict between the countries.

While it remains to be seen if and when those tariffs come into effect, China says it will respond with the additional $60 billion of tariffs if the US follows through on its latest trade threat.

"The US side has repeatedly escalated the situation against the interests of both enterprises and consumers," a statement from the Chinese Commerce Ministry said.

"China has to take necessary countermeasures to defend its dignity and the interests of its people, free trade and the multilateral system."

Covering everything, from planes to condoms

Both countries imposed tariffs on $34 billion worth of the other's imports in early July. The US is expected to implement tariffs on a further $16 billion worth of goods in the near future, which China says it will match immediately.

If the latest threats are followed through, it will mean China will have slapped tariffs on $110 billion worth of US goods, accounting for almost everything it imports from the US. In 2017, China imported around $130 billion of US goods.

In contrast, the US would have placed levies on $250 billion worth of Chinese goods, barely half the amount the imports from China — a reflection of the huge trade surplus China runs with the US.

Read more: Trump's tariffs: When does a trade spat become an actual trade war

The notional Chinese tariffs announced on Friday would range from 5 percent to 25 percent in value, and would affect a wide range of goods from gas to aircraft-related products, textiles to condoms.

Muddling through

White House economic advisor Larry Kudlow responded to China's proposed countermeasure on Friday, saying the threat was "weak" and was a reflection of the damage Trump's policies are doing to the Chinese economy.

"Foreign investors don't want to be in China. I noticed today that Japan's stock market is now worth more than China's — I love that," he said, referring to Friday's news that the value of equities in mainland China had slipped.

Whilst emphasising his view that the Chinese economy was "in trouble" because on Trump's policies, Ludlow did acknowledge that the Chinese could yet choose to take some kind of action against US companies operating in China.

Given the scale of the trade imbalance between the two countries, China cannot match the volume of US tariffs against its imports.

However, analysts have said that China will be able to muddle through the ongoing conflict by expanding stimulus programs, fiscal spending and bank lending, while the US can handle things by looking to third-party nations.

"The US and China have backup plans in areas like technology and agriculture, where they can look towards importing from third-party nations," Ye Tan, an independent Chinese economic analyst, told AFP.

"The Chinese are also coping by lowering the rate of the yuan, while the US can look towards countries in Southeast Asia as replacements for its imports, so it's not a big issue."

aos/kd (AFP, Reuters)