Flamethrowers and Semiconductors: Inside Trump’s New China Tariffs

President Trump’s trade war with China has been encapsulated in a 58-page document that was released in Washington on Tuesday. The list of newly taxed items has everything from flamethrowers to semiconductors and even fetal bovine serum, a sign that the Trump administration will leave no stone unturned in its quest to combat China’s predatory trade practices.

Tariff List Announced

The Office of the United States Trade Representative has unveiled a comprehensive list of Chinese imports that will be taxed at the border as part of President Trump’s new tariff policy. The proposed list, which is valued at roughly $50 billion, includes items that will be targeted for an additional 25% duty.

By releasing the document, the Trade Representative’s office opens the door for a 60-day public consultation on the matter.

The report indicated that President Trump had instructed the Trade Representative to embark on a so-called 301 investigation on Aug. 14, 2017. The mandate allowed officials to investigate “laws, policies, practices, or actions of the Government of China that may be unreasonable or discriminatory and that may be harming American intellectual property rights, innovation, or technology development.”

Regarding the tariffs, the report adds: “This level is appropriate both in light of the estimated harm to the U.S. economy, and to obtain elimination of China’s harmful acts, policies, and practices.”

A total of 1,300 product lines were included in the report.

Chinese Retaliation Expected

China has long held that it does not wish for a trade war with the United States, but that it will retaliate with appropriate measures if needed. The Ministry of Commerce in Beijing has already condemned the proposed tariffs, adding that it plans to file a formal dispute on the matter with the World Trade Organization.

Beijing has already announced plans to implement retaliatory tariffs on U.S. goods worth up to $3 billion, targeting items such as pork, wine and even steel. However, the Chinese appear to have offered Washington an olive branch last month by vowing to buy more American-made semiconductors. Based on the extent of Washington’s tariff policy, more will be needed to appease the Republican administration.

Protectionism is considered a major threat for investors, who have grown accustomed to liberal trade policies and globalization. This paradigm has underpinned the political order for decades, with China emerging as a key cog in the global supply chain.

The battle for trade dominance has rattled markets in recent weeks, with tariff threats triggering massive declines in equities. Trade-war risks are likely to remain in the foreground as China prepares its response to the Trump administration’s protectionist stance. If anything, the Chinese will continue to present themselves as the paragon of international trade in the 21st century, a message that aligns with President Xi Jinping’s economic policy.

Xi made his case for globalization even before Trump was inaugurated. In prepared remarks before the World Economic Forum in January 2017, the Chinese president gave a strong defence of free trade while at the same time warning against protectionist policy.

Featured image courtesy of Shutterstock.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi