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Trump raises import duties for Chinese goods to 25%

16 May 2019

Businesses who want to export products made in China to the US can expect to pay even higher rates from now on. After the trade negotiation between both countries on 10 May ended without an agreement, Donald Trump initiated the procedure to raise import duties for virtually all goods imported from China to 25%.

Most imported products, e.g. food and consumer electronics, were already taxed at a rate of 10%. On 10 May, this was raised to 25% for 200 billion dollars’ worth of imported goods from China, mainly consumer products such as smartphones, toys and clothing. If no agreement is reached, the same will happen to all other imported goods ($289 billion).

China retaliates

Although Trump warned the Chinese in a tweet not to raise their own import duties, they are going to do so regardless. Per 1 June, China will raise the import duties for a wide range of American products, including coffee, tea, frozen vegetables, TVs, headsets and chemical products. That is bad news for the stock exchanges: share prices plummeted once this news got out. With this development, the trade war that Trump began a year ago has reached a new low.

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Peace agreement seemed inevitable

For a while, a peace agreement between China and the US seemed inevitable. Delegations from both countries met last week in Washington to discuss how to put an end to the trade war. Despite their best intentions, the Chinese delegation leader Liu He, the American Secretary of the Treasury Steve Mnuchin and trade emissary Robert Lighthizer left the meeting after just ninety minutes.

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Consequences for the rest of the world

As the two world powers fight their war, the European Union and Japan stand on the side lines without acting as a mediator. That is a missed opportunity, because the IMF believes there are only losers in this war: the economic growth in both the US and China is impacted negatively, regardless of what the outcome will be. There are consequences for the rest of the world as well. For example, European businesses that produce goods in China to sell on the American market are hit by the raised import duties.

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Would you like to know more?

Read the interview with our international account manager Tim Franssen. He explains how the import duties affect businesses that produce goods in China and what you can do to avoid them.