The U.S. announcement that it may impose tariffs on another $100 billion of unspecified Chinese imports further raises the stakes in the China-U.S. trade dispute. This action draws the countries even nearer to an all-out trade war, according to S&P Global Ratings.“We still hold the view that the potential near-term effects on corporate credit are likely to be muted. Admittedly, though, some industries could be more affected. A greater threat is the dispute expanding beyond tariffs on goods. A breakdown in negotiations and policy missteps could spiral into a trade war, damaging global business and consumer confidence, investment prospects, and growth.”
On April 5, 2018, the U.S. President instructed the Office of the U.S. Trade Representative (USTR) to consider whether tariffs on an additional $100 billion on Chinese good imports would be appropriate under Section 301 of the Trade Act of 1974. The USTR has described China’s proposal to impose tariffs on $50 billion of U.S. exports to China, including agricultural products, as unjustified.
The total value of Chinese goods possibly subject to U.S. tariffs is now $150 billion, S&P Global Ratings says.
“This is equivalent to a substantial 30% of the $505 billion of China’s exports to the U.S. Overnight, China had initiated a World Trade Organization (WTO) dispute resolution procedure over U.S. tariffs on steel and aluminum. China’s proposal to levy tariffs on $50 billion of U.S. goods represents 38% of the $130 billion in U.S. exports to China. This leaves a further $80 billion of U.S. goods to China that are not covered by China’s tariffs, yet.”
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