Tariffs Stoke U.S.-China Tensions

Concerns over a trade war between the U.S. and China grow as high-level talks took place over the weekend, following Chinese Premier Xi Jinping's response to planned U.S. steel import tariffs.

On Friday, China’s government issued a statement outlining retaliatory taxes on U.S. goods, with tariffs of roughly 15 percent to 25 percent on 128 goods such as pork, wine and recycled aluminum.

The move follows an announcement by U.S. President Donald Trump the week prior to impose steep tariffs on imports, with Chinese steel cargoes potentially taxed at 25 percent and aluminium at 10 percent.

“China does not want a trade war with anyone. But China is not afraid of and will not recoil from a trade war. China is confident and capable of facing any challenge. If a trade war were initiated by the U.S., China would fight to the end to defend its own legitimate interests with all necessary measures,” the Chinese government said in a statement.

The response was widely seen as indicative of robust stance against Trump’s punitive measures. But many in China felt the list of tariffs did not go far enough, with some Chinese officials, academics and journalists calling for further tariffs on automotive, aeronautical and soya products.

Gloomy shipping outlook


While high-level talks to resolve the dispute have taken place over the weekend, and there remains hope of resolution between China and the U.S. in the coming weeks, the outlook for the shipping sector is not positive as uncertainty weighs on a sector which is only just starting to recover from years of depressed rates.

“Tariffs targeting US$60 billion worth of Chinese goods will likely put a big damper on cargo demand, and hence hit shipping badly with overcapacity still haunting on the vessel supply side. But at least, there is room for talks,” said Chichen Shen, Northeast Asia correspondent at Lloyd’s List.

If enacted in full the proposed tariffs from China and the U.S. would likely act as a significant brake on breakbulk demand worldwide, as shipments of steel fall and costs for value-added components rise sharply.

Gulf ports raise tariff concerns

Authorities at U.S. Gulf ports have also raised concern over a fall in cargo volumes resulting from any trade war, with much of the region’s burgeoning oil and gas sector heavily dependent on steel and aluminum imports.

“Our history shows that steel cargo immediately declined following a tariff increase … As a result, we are concerned that the proposed 25 percent tariff on steel cargo could decrease cargo volumes, creating a detrimental impact on local jobs and the economy. We urge that the matter continue to be reviewed,” said Roger Guenther, executive director at the Port of Houston.

Photo: Xi Jinping and Donald Trump. Credit: Wikimedia