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August 8, 2018 11:15 AM, EDT
China Says It Will Match 25% Tariff on $16 Billion of US Goods Aug. 23
25% Tariff Getty Images

China confirmed that it will impose 25% additional tariffs on $16 billion worth of imports from the United States from Aug. 23, matching an earlier move from Washington in another ratchet higher for the trade war between the nations.

The U.S. decision to levy 25% tariffs on the same value of Chinese goods is “very unreasonable,” and China will have to retaliate to protect its rightful interests and the multilateral trading system, China’s Ministry of Commerce said in a statement.

The tit-for-tat tariffs are poised to surge even higher, with the United States reviewing 10% duties on a further $200 billion in Chinese imports that it may even raise to 25% after a comment period ends Sept. 6. Should the United States proceed with those tariffs, China’s ready to slap duties on an additional $60 billion of American goods.

The situation is “not yet past the point of no return but edging closer,” said Wang Tao, head of China economic research at UBS AG in Hong Kong, in a note before the latest announcement. “The risk is if the U.S. administration’s gamble to strong arm China into giving into all U.S. demands without some U.S. compromise only leads to successive rounds of higher and higher U.S. tariff impositions.”

President Donald Trump has suggested he may tax effectively all imports of Chinese goods, which reached more than $500 billion last year. Reserve Bank of Australia Gov. Philip Lowe on  Aug. 8 warned that escalation of the dispute could be “very damaging for the world economy.”

China’s exports grew faster than expected in July, while imports surged, showing domestic and international demand continue for now to shrug off the uncertainty of the trade conflict with the United States. The world’s largest exporter, China still is benefiting from robust global demand even as increasing tensions and rising trade barriers with the United States weigh on the outlook.

The United States announced earlier this week that its own tariffs on $16 billion of Chinese goods would start Aug. 23. The Chinese list covers items including coal, oil, chemicals and some medical equipment. The United States levied 25% duties on $34 billion in Chinese goods on July 6, prompting swift in-kind retaliation from Beijing.

With assistance by Miao Han, Kevin Hamlin, and Andrew Mayeda.