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Tariffs on US$200 Billion in Mainland Chinese Goods Could Jump from 10 to 25 Percent as of 10 May

President Trump is threatening to increase a 10 percent additional tariff on US$200 billion worth of goods imported from mainland China (List 3 goods) to 25 percent effective 10 May and to impose a new 25 percent additional tariff on all goods from mainland China not already subject to higher tariffs under the Section 301 process (List 4 goods). These tariff increases would affect a broad range of consumer and other goods.

The Trump administration has been negotiating a trade agreement with mainland China and senior officials had said in recent weeks that talks were making good progress. However, in an apparent justification of the potential tariff increase, Trump said on social media over the weekend that the discussions are going “too slowly” and Beijing is attempting to “renegotiate.” Considering that the warning came just days before the expected arrival of a mainland Chinese delegation in Washington for what could be the final round of talks, it could thus be intended to give U.S. officials additional leverage in those negotiations.

Any decision to actually impose the threatened tariff increases would have to be made via an official communication from the White House. The White House has delayed these increases twice before and could do so again depending on various factors, including progress in the next round of talks and the reaction of financial markets. That reaction had been largely negative so far, and trade and industry groups were raising concerns that the tariff increase could cost nearly one million U.S. jobs, lower domestic economic output and increase prices for consumers.

In the meantime, there have been reports that the Office of the U.S. Trade Representative is working to develop a process to allow requests to exclude products from the additional tariff on List 3 goods. Despite a congressional directive to do so, USTR Robert Lighthizer has said it would not happen unless this tariff is increased to 25 percent.

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