Trump orders expansion of tariffs on Chinese products; is tilapia next? from undercurrent news By Jason Huffman

President Donald Trump has fired yet another volley in his escalating trade fight with China, ordering the US Trade Representative (USTR) to significantly expand the list of Chinese goods to be slapped with tariffs. 

The latest move raises the specter that seafood imported from China, including especially tilapia and shrimp, could be next.

The White House late on Monday announced that it was asking the USTR to draw up a list of $200 billion-worth of Chinese goods to hit with an additional 10% tariff in response to China publishing a list of 545 US items worth $50bn in export revenue on Friday that it would slap with a 25% tariff.

Additionally, the president has promised further escalation in his attack on China's alleged theft of intellectual property and unfair trade practices should it respond with more tariffs on US goods, promising to pursue tariffs on yet another $200bn of Chinese products. 

"This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance in goods," Trump said in a statement. "This is unacceptable. Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States."

China's list, which included about a billion dollars worth of US seafood, was a retaliation to Trump's move earlier in the day to update a list of now 1,102 items worth $50bn on which a 25% tariff would be levied. The tariffs, in particular, threaten the US lobster industry. 

Both the US and Chinese tariffs are slated to go into effect on July 6.

In a subsequent statement issued Monday, Robert Lighthizer, head of the USTR office, said his staff was preparing the proposed tariffs as instructed by the president.

“I support the president’s action," Lighthizer said. "The initial tariffs that the president asked us to put in place were proportionate and responsive to forced technology transfer and intellectual property theft by the Chinese. It is very unfortunate that instead of eliminating these unfair trading practices China said that it intends to impose unjustified tariffs targeting US workers, farmers, ranchers, and businesses.”

The move sent Asian markets sliding on Tuesday, with Shanghai closing down 3.78%, its biggest drop in two years, and Shenzhen down 5.31%, the Washington Post reported.

China’s Ministry of Commerce has called the move “blackmail", warning, "If the U.S. loses its senses and publishes a new list, China will be forced to take comprehensive measures that are both strong in quantity and gravity and will fight back”.

The ceiling is close

Trump's threat of placing tariffs on Chinese products is close to hitting the ceiling, noted Politico senior trade reporter Doug Palmer in an article published late Monday. At a combined $450bn worth of goods tariffed, the US will have placed tariffs on all but 10% of the $505bn worth of goods imported from China in 2017. 

By contrast, Palmer noted, the US exported only about $130bn worth of products to China in 2017.

Should the US add Chinese seafood to tariff next it has a long list of products to choose from. The US imported $2.7bn worth of Chinese seafood in 2017 compared to the $1.3bn worth of seafood it sent to China, based on data from the National Oceanic and Atmospheric Administration. Only Canada sent the US more seafood last year ($3.3bn worth). Also, the US imports a lot of finished products from China from salmon, cod and pollock raw material it has exported. 

Importers of tilapia and shrimp from China have the most to lose. The US imported $426 million worth of tilapia and $335m of shrimp in 2017. China was the source of 75% of the US's tilapia imports last year.

But such a move would have the support of several southern state lawmakers, including senator John Kennedy, a Louisiana Republican, who wrote Trump an April 17 to add shrimp and crawfish from China to the list of items that should get tariffed. 

"Including crawfish and shrimp would provide a much needed economic boost to the Louisiana seafood industry, which provides the finest seafood in the world," Kennedy said. "For years, Chinese companies have dumped inferior, sometimes fraudulent, seafood products into the American marketplace and Louisiana industries have suffered as a result."

[A]n unusual way to negotiate'

In an interview on Monday, Bart Oosterveld, director of the global business and economics program for the Atlantic Council, a Washington, D.C.-based think tank for international affairs, correctly predicted that the trade spat between the Trump administration and China had at least one or two more rounds in it. He said it was unlikely that a resolution could be reached before July 6.  

Whatever the Trump administration puts on its next list of Chinese goods will be carefully chosen in order to inflict the most pain, Oosterveld suggested. By picking agricultural goods in its latest list, China appeared to be targeting Trump's electoral base, he said.  

But Oosterveld said he was optimistic that the US and China would ultimately reach a bilateral deal by the end of the year.

“I do think this is an unusual way to negotiate, upping the pressure and putting on display what kind of damage you are willing to inflict and live with so that the stakes get raised before you sit down at the table,” he said. “So if you want to call that optimism, that’s fine with me, but I do think they are getting closer to a bilateral arrangement with the Chinese that is more agreeable to the current administration.”

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