Regulation

Trump Administration Wants To Raise China Tariffs To 25 Percent

Some Trump administration advisers are pushing the president to set tariffs as high as 25 percent on $200 billion of Chinese imports — a steep increase from the original proposal for 10 percent. According to The Wall Street Journal, the White House is expected to make a final decision sometime in late August on the tariffs, which are expected to target consumer goods and food, as well as machinery components.

The president’s advisers, in favor of the steeper tariffs, believe it will make up for the rapid depreciation of the yuan in recent months. In fact, since May 30, the yuan has fallen 6 percent against the dollar.

“Once you go down the road of using tariffs to disrupt the Chinese, you have to say 25 percent compared to 10 percent,” said Derek Scissors, a China expert at the American Enterprise Institute (AEI) who advises the administration on trade.

The U.S. has already imposed 25 percent tariffs on $34 billion-worth of Chinese imports, and is set to levy similar tariffs on an additional $16 billion of goods. Earlier this week, it was reported that Trump’s tariffs on billions of dollars-worth of imported Chinese goods are starting to take its toll on the Chinese economy and could usher in a bigger stimulus for the country.

In the meantime, Treasury Secretary Steven Mnuchin and Chinese envoy Liu He — along with their staffs — continue to talk about a possible meeting, but the talks are still at a preliminary stage.

In addition, the Trump administration is divided over how to deal with the Chinese. On the one hand, China trade hawks, led by U.S. Trade Representative Robert Lighthizer, believe China will make concessions only if it feels the impact of heavy tariffs. But trade doves, including Mnuchin, are looking to find a solution that doesn’t involve massive tariffs, mainly because they fear the Chinese could retaliate with tariffs on American goods, which could slow U.S. growth and tank financial markets.

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