US prepares new $288 billion tariffs on Chinese imports in retaliation

US Secretary of State Mike Pompeo. Photo / AP

President Donald Trump directed the US Trade Representative to prepare new tariffs on US$200 billion ($288.5b) in Chinese imports Monday as the two nations moved closer to a potential trade war.

The tariffs, which Trump wants set at a 10 per cent rate, would be the latest round of punitive measures in an escalating dispute over the large trade imbalance between the two countries.

Trump recently ordered tariffs on US$50b in Chinese goods in retaliation for what the US said is intellectual properly theft. The tariffs were quickly matched by China on US exports.

"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology," Trump said in a statement Monday announcing the new action.

"Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong."

Trump added: "These tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced."

Trump said that if China responds to this fresh round of tariffs, then he will move to counter "by pursuing additional tariffs on another US$200b of goods."

Trump's comments come hours after the top US diplomat accused China of engaging in "predatory economics 101" and an "unprecedented level of larceny" of intellectual property.

Secretary of State Mike Pompeo made the remarks at the Detroit Economic Club as global markets reacted to trade tensions between the US and China. Both nations started putting trade tariffs in motion that are set to take effect July 6.

He said China's recent claims of "openness and globalization" are "a joke." He added that China is a "predatory economic government" that is "long overdue in being tackled," matters that include IP theft and Chinese steel and aluminum flooding the US market.

"Everyone knows ... China is the main perpetrator," he said. "It's an unprecedented level of larceny."

"Just ask yourself: Would China have allowed America to do to it what China has done to America?" he said later. "This is predatory economics 101."

The Chinese Embassy in Washington did not immediately respond to a request for comment.

Pompeo raised the trade issue directly with China last week, when he met in Beijing with President Xi Jinping and others.

"I reminded him that's not fair competition," Pompeo said.

President Donald Trump had announced a 25 per cent tariff on up to US$50b in Chinese imports. China is retaliating by raising import duties on US$34b worth of American goods, including soybeans, electric cars and whiskey. Trump also has slapped tariffs on steel and aluminum imports from Canada, Mexico and European allies.

Wall Street has viewed the escalating trade tensions with wariness, fearful they could strangle the economic growth achieved during Trump's watch. Gary Cohn, Trump's former top economic adviser, said last week that a "tariff battle" could result in price inflation and consumer debt — "historic ingredients for an economic slowdown."

Pompeo on Monday described US actions as "economic diplomacy," which, when done right, strengthens national security and international alliances, he added.

"We use American power, economic might and influence as a tool of economic policy," he said. "We do our best to call out unfair economic behaviors as well."

In a statement, Trump says he has an "excellent relationship" with Xi, "but the United States will no longer be taken advantage of on trade by China and other countries in the world."

- AP