WASHINGTON (MaceNews) – In what analysts have said is a measured response, intended not to further escalate U.S.-China trade tensions, China nevertheless Tuesday has imposed some significant new penalties.
Chief among them are export controls on several rare-earth minerals important to the U.S. manufacture of high-tech products. They include indium, bismuth, molybdenum, tellurium and tungsten. The controls are on top of those imposed in December on gallium and other elements.
China also imposed a 15% tariff on automobiles with what it describes as large engines. While not broadly damaging to the U.S. auto industry, given the limited number – slightly more than 100,000 – of vehicles exported to China last year, the levy could impinge with some force on GM and Ford which have expanded their China offerings.
Less impactful, perhaps, is a new 15% tariff on U.S. liquefied natural gas exports, the proportion of which has been in the low single digit percentages of total LNG exports. Coal exports also get a 15% tariff.
China also intensified its threat against Google, already blocked there. But any new restrictions could affect potential sales of its Pixel smartphones.
Several U.S. companies were added to China’s “unreliable entities” list which makes them liable for sales restrictions or prohibitions. They are Illumina, a biotech firm, and the Calvin Klein and Tommy Hilfiger apparel subsidiaries of PVH Group, apparently for their boycott of Xinjian cotton.
A President Trump conversation with China’s President Xi is expected later today. But the fact that China was not given the month’s reprieve from U.S. tariffs granted Canada and Mexico, after some last-minute negotiations before the midnight deadline, suggests that country is a higher priority target of the White House.
The entire tariffs initiative came in the earliest days of the Trump administration and may be a continuing project for months or years to come, regardless of interim exemptions and negotiations. The European Union is also a target in the near future, Trump has said, while rifle shot tariffs are always possible aimed at individual countries like that applied briefly to Colombia last week.
Analysts have pointed out that aside from any tariffs, the cost of gasoline at the pump is expected to rise soon as a result of summer blending adjustments by refiners and the cost of Canadia softwood lumber is also expected to go up 15% or more as a result of cross-border industry adjustments based on trade complaints that go back decades.
Meanwhile oil firms with operations in Alaska are rooting for tariffs directed at Canada’s oil industry, hoping for new demand for their excess production capacity and for the output of the developing Willow Field project.