Trump’s $200 Billion Tariff Hike Takes Effect as US-China Trade Talks Head Into Second Day

May 10, 2019 Updated: May 13, 2019

BEIJING—President Donald Trump’s latest tariff hike on Chinese goods took effect on May 10 and Beijing said it would retaliate, escalating a battle over China’s technology ambitions and other trade strains.

The Trump administration raised duties on $200 billion of Chinese imports from 10 percent to 25 percent. “China deeply regrets that it will have to take necessary countermeasures,” said a Commerce Ministry statement which gave no details.

The increase went ahead as scheduled after American and Chinese negotiators began more talks in Washington aimed at ending a dispute that has disrupted billions of dollars in trade.

The latest increase extends 25 percent U.S. duties to a total of $250 billion of Chinese imports. Trump said Sunday he might extend penalties to all Chinese goods shipped to the United States.

Beijing retaliated for previous tariff hikes by raising duties on $110 billion of American imports. But regulators are running out of U.S. goods for penalties due to the lopsided trade balance.

Chinese officials have targeted operations of American companies in China by slowing customs clearance for their goods and stepping up regulatory scrutiny that can hamper operations.

The higher U.S. import taxes don’t apply to Chinese goods shipped before Friday. By sea, shipments across the Pacific take about three weeks, which gives negotiators a few more days to reach a settlement before importers may have to pay the increased charges.

The negotiators met Thursday evening. Then, after briefing Trump on the negotiations, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin dined with the leader of the Chinese delegation, Vice Premier Liu He.

At the White House, Trump said he received “a beautiful letter” from Chinese leader Xi Jinping and would “probably speak to him by phone.”

The two countries are sparring over U.S. allegations that China steals technology and pressures American companies into handing over trade secrets, part of an aggressive campaign to turn Chinese companies into world leaders in robotics, electric cars and other advanced industries.

American officials accuse Beijing of backtracking on commitments made in earlier rounds of negotiations.

U.S. officials say they got an inkling of China’s second thoughts about prior commitments in talks last week in Beijing but the backsliding became more apparent in exchanges over the weekend. They wouldn’t identify the specific issues involved.

U.S. officials are insisting that any deal be strictly enforced so that China lives up to its promises—something they say Beijing has repeatedly failed to do in the past. “China has been cheating for far too long,” Rep. Kevin Brady of Texas, top Republican on the House Ways and Means Committee, told reporters. “Now is that moment in time to get the right trade agreement with China.”

China wants tariffs lifted as soon as an agreement is reached, while U.S. officials want to keep them as leverage to ensure compliance.

Canadian Prime Minister Justin Trudeau urged Trump in a phone call to press China to release two Canadians who have been held for five months.

The men were detained in apparent retaliation after Canada arrested an executive of Chinese tech giant Huawei on U.S. charges of bank fraud.

The two countries are expected to resume talks on Friday. Officials did not speak to reporters as they left the talks.

With additional reporting by Reuters

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