US President Donald Trump is now intending to triple down on his trade actions against China. He has just ordered the Trade Representative to consider tariffs on additional USD 100b in Chinese imports, in addition to the USD 50b list of 1300 product lines. In his own statement, Trump condemned China’s retaliation as “unfair” to “harm our farmers and manufacturers”. He also ordered the Secretary of Agriculture to “implement a plan to protect our farmers and agricultural interests”. USTR Robert Lighthizer supported Trump’s proposal and said it’s an “appropriate response” to China’s recent threat of new tariffs.

Below are the statements from Trump and Lighthizer:

Statement from President Donald J. Trump on Additional Proposed Section 301 Remedies

Following a thorough investigation under section 301 of the Trade Act of 1974, the United States Trade Representative (USTR) determined that China has repeatedly engaged in practices to unfairly obtain America’s intellectual property. The practices detailed in the USTR’s investigation have caused concern around the world. China’s illicit trade practices − ignored for years by Washington − have destroyed thousands of American factories and millions of American jobs. On April 3, 2018, the USTR announced approximately $50 billion in proposed tariffs on imports from China as an initial means to obtain the elimination of policies and practices identified in the investigation.

Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers. In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs. I have also instructed the Secretary of Agriculture, with the support of other members of my Cabinet, to use his broad authority to implement a plan to protect our farmers and agricultural interests.

Notwithstanding these actions, the United States is still prepared to have discussions in further support of our commitment to achieving free, fair, and reciprocal trade and to protect the technology and intellectual property of American companies and American people. Trade barriers must be taken down to enhance economic growth in America and around the world. I am committed to enabling American companies and workers to compete on a level playing field around the world, and I will never allow unfair trade practices to undermine American interests.

USTR Robert Lighthizer Statement on the President’s Additional Section 301 Action

“President Trump is proposing an appropriate response to China’s recent threat of new tariffs. After a detailed investigation, USTR found overwhelming evidence that China’s unreasonable actions are harming the U.S. economy. In the light of such evidence, the appropriate response from China should be to change its behavior, as China’s government has pledged to do many times. Economies around the world – including China’s own – would benefit if China would implement policies that truly reward hard work and innovation, rather than continuing its policies that distort the vital high-tech sector.

“Unfortunately, China has chosen to respond thus far with threats to impose unjustified tariffs on billions of dollars in U.S. exports, including our agricultural products. Such measures would undoubtedly cause further harm to American workers, farmers, and businesses. Under these circumstances, the President is right to ask for additional appropriate action to obtain the elimination of the unfair acts, policies, and practices identified in USTR’s report.”

Any additional tariffs proposed will be subject to a similar public comment process as the proposed tariffs announced on April 3, 2018. No tariffs will go into effect until the respective process is complete.

In a quick response to US Section 301 tariffs, China announced to impose additional tariffs of 25% on 106 US products. The total value of the products will add up to around USD 50b, matching the size of the US 301 tariffs.

The Finance Ministry also said in a press briefing that the goods will include soybeans, autos, chemicals, some types of aircraft and corn products, among other agricultural goods. Additional, extra tariffs will be imposed on whisky, cigars and tobacco, some types of beef, lubricants, and propane and other plastic products. The list also include certain sorghum products, cotton, some types of wheat, as well as trucks, some SUVs, certain electric vehicles.

Here is the statement from the Ministry of Finance (in Simplified Chinese).

Upcoming at 16:30 Beijing time, 0830 GMT, China’s commerce and finance ministries will hold a press briefing regarding the US Section 301 tariffs. It believed that retaliatory measure will be announced during the briefing. China has pledged to take counter measures at the same intensity and proportionality. But no detail is leaked so far. The worst for the market is that China’s response will prompt counter retaliation by the US. That could lead to escalating tariffs that drastically reduce the trade activities between the two countries.

China’s envoy to the WTO, Zhang Xiangchen criticized that the tariffs on USD 50b of China import to the US is “an intentional and gross violation of the WTO’s fundamental principles of non-discrimination and bound tariffs.” And he urged other WTO members to “join with China in firmly resisting U.S. protectionism”.

Reactions to US announce of the product list of Section 301 tariffs were initially muted. Japan Nikkei has indeed closed up 0.13%. But fear in the stock markets start to build up with Hong Kong HSI suffering sharp fall in the afternoon, and is trading down -1.44%.

The currency markets are rather steady though, with NZDCHF, NZDUSD topping the top movers chart with slight gains.

China responded to the Section 301 tariff list quickly with a strongly worded statement through the Embassy in the US.

China said it “strongly condemns and firmly opposes the unfounded Section 301 investigation and the proposed list of products and tariff increases based on the investigation.”

It condemned that “unilateralistic and protectionist action has gravely violated fundamental principles and values of the WTO”. And such action serves nobody’s interest.

China said it’s “only polite to reciprocate” and said it will resort to the WTO.

In addition, China pledged to take “corresponding measures of equal scale and strength against U.S. products in accordance with Chinese law”.

Full statement in English and Simplified Chinese.

China’s Ministry of Commerce also said in a statement that it will ” immediately bring relevant U.S. practice to the dispute settlement body of the WTO, and is ready to take counter measures on U.S. products with the same intensity and scale that will be published in the coming days.”

Statement in Simplified Chinese.

The Office of the United States Trade Representative finally released the list of products regarding the Section 301 tariffs against China. Market reactions are so far very muted. Nikkei opened with slight gain following 1.65% rebound in DOW overnight but gyrated lower. It’s currently down around -0.1%. Hong Kong HSI is trading flat. China SSE is trading up 0.6%.

In the currency markets, NZDUSD is trading as the biggest mover for the day so far an is up 32 pips, NZDH CHF follows and is up 26 pips. EURNZD is down -58 pts at the time of writing.

The Section 301 action will impose 25% tariffs on approximately USD 50b of Chinese imports to the US  “in response to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises.” And the Trade Res presentative claimed in the statement that these policies “bolster China’s stated intention of seizing economic leadership in advanced technology” in its “Made in China 2025” plan.

The proposed list of products covers around 1300 tariff lines, focusing on technological and industrial products, like televisions, medical devices, batteries, aircraft parts etc. The list will be finalized after public comment, including a hearing on May 15 in Washington. And companies will have until May 22 to file final objections.

Full release from US Trade Representative

And the list of products could be find here on page 14.