The United States has decided to move forward with imposing tariffs on 50 billion dollars’ worth of Chinese imports and announced potential restrictions on Chinese access to U.S. technology and investment.
The move comes just a week after talks in Washington were described as fruitful and constructive. The talks with China’s top economic advisor Liu He were so productive that U.S. Treasury Secretary Steve Mnuchin said afterward that any trade war between the two nations was now “on hold.”
Reacting to the White House move the Chinese Ministry of Commerce said: “We are very surprised by the White House statement.” Chinese officials added that it goes “against the consensus we reached with our U.S. counterparts in Washington DC.”
The Ministry of Commerce also said: “No matter what measures the U.S. will take, China is confident and capable of defending our national interests.” Adding “We urge the U.S. to act according to our previous joint statement”.
The White House says the “final list of covered imports” will be announced on June 15th and “tariffs will be imposed on those imports shortly after.”
In the same statement, the White House says it, “will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology.” The statement goes onto say: “The proposed investment restrictions and enhanced export controls will be announced by June 30, 2018, and they will be implemented shortly thereafter.”
Washington’s surprise turnaround on trade comes just as U.S. Commerce Secretary Wilbur Ross prepares to head to China this week for follow-up talks with Beijing. Washington says Beijing has agreed to buy more U.S. products, especially in the agricultural and energy sectors. Chinese officials confirmed this. China also announced it will lower tariffs on foreign-made cars from 25% to 15%. Beijing will also end an anti-dumping investigation into imports of U.S. sorghum.
The U.S., too, had in recent days moved to ease tensions. The U.S. President indicated a deal was in reach to prevent the collapse of embattled telecommunications giant ZTE. ZTE had to suspend operations after the U.S. Commerce Department banned U.S. tech companies from selling components to ZTE for seven years. ZTE had settled a sanctions-busting case with the U.S. Failing to comply with all the terms triggered the crippling sales ban. ZTE relies heavily on U.S. components.
The U.S. President tweeted on May 26th: “I closed it down then let it reopen with high-level security guarantees, change of management and board, must purchase U.S. parts and pay a $1.3 Billion fine.”
Trump has faced intense criticism from the U.S. Congress over his handling of the ZTE case. Congress was, until this latest announcement on tariffs and investment, moving to block any deal over ZTE.