WASHINGTON (Reuters) – U.S. President Donald Trump escalated his trade war with China on Monday, imposing 10 percent tariffs on about $200 billion worth of Chinese imports, but sparing smart watches from Apple (AAPL.O) and Fitbit (FIT.N) and other consumer products such as bicycle helmets and baby car seats.
Trump, in a statement announcing the new round of tariffs, warned that if China takes retaliatory action against U.S. farmers or industries, “we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”
The iPhone was not among the ‘wide range’ of products that Apple told regulators would be hit by the $200 billion round of tariffs in a September 5 comment letter to trade officials.
But if the Trump administration enacts a further round of tariffs on $267 billion in goods, engulfing all remaining U.S. imports from China, the iPhone and its competitors would not likely be spared.
Collection of tariffs on the long-anticipated list will start September 24 but the rate will increase to 25 percent by the end of 2018, allowing U.S. companies some time to adjust their supply chains to alternate countries, a senior administration official said.
So far, the United States has imposed tariffs on $50 billion worth of Chinese products to pressure China to make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies.
The escalation of Trump’s tariffs on China comes after talks between the world’s two largest economies to resolve their trade differences produced no results. U.S. Treasury Secretary Steven Mnuchin last week invited top Chinese officials to a new round of talks, but thus far nothing has been scheduled.
“We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly,” Trump said in his statement. “But, so far, China has been unwilling to change its practices.”
A senior Trump administration official told reporters that the United States was open to further talks with Beijing, but offered no immediate details on when any new meetings may occur.
“This is not an effort to constrain China, but this is an effort to work with China and say, ‘It’s time you address these unfair trade practices that we’ve identified that others have identified and that have harmed the entire trading system,’” the official said.
China has vowed to retaliate further against any new U.S. tariffs, with state-run media arguing for an aggressive “counterattack.”
China’s yuan currency CNY=CFXS has weakened by about 6.0 percent against the U.S. dollar since mid-June, offsetting the 10 percent tariff rate by a considerable margin.
CONSUMER TECH TRIMMED
The U.S. Trade Representative’s office eliminated 297 product categories from the proposed tariff list, along with some subsets of other categories, but administration officials said the total value of the revised list would still be “approximately $200 billion.”
A broad, $23 billion category of internet-connected devices will remain subject to tariffs, but some products, such as smart watches, Bluetooth devices, and other consumer-focused technology products were removed following a lengthy public vetting period during which more than 6,000 comments were received.
Also spared from the tariffs were Chinese inputs for U.S.-produced chemicals used in manufacturing, textiles and agriculture.
Consumer safety products made in China, such as bicycle helmets sold by Vista Outdoor (VSTO.N) and baby car seats and playpens from Graco Inc (GGG.N) also were taken off the list.
But the adjustments did little to appease technology and retail groups who argued that the tariffs would hit consumers hard.
“President Trump’s decision to impose an additional $200 billion is reckless and will create lasting harm to communities across the country,” said Dean Garfield, president of the Information Technology Industry Council, which represents major tech firms.
The Retail Industry Leaders Association pointed out that the new tariffs would still hit more than $1 billion worth of gas grills from China, $843 million worth of luggage and travel bags, $825 million worth of mattresses, and $1.9 billion worth of vacuum cleaners.
“Tariffs are a tax on American families, period,” said Hun Quach,” RILA’s vice president for international trade. “Consumers – not China – will bear the brunt of these tariffs and American farmers and ranchers will see the harmful effects of retaliation worsen.”
Republican party U.S. lawmakers urged the Trump administration to pursue negotiations with China to resolve trade differences, while applauding Trump’s tough stance on Chinese intellectual property and trade practices.
“The sooner President Xi and President Trump meet to craft a new trade path forward, the better,” said Representative Kevin Brady, chairman of the House Ways and Means Committee.
Reporting by Steve Holland, David Lawder, Ginger Gibson, Eric Beech and David Shepardson; Editing by Clive McKeef