China Devalues Its Currency, Halts Purchases of U.S. Agricultural Products, and Threatens Additional Tariffs on U.S. Goods
Yesterday, China’s Ministry of Commerce suspended purchases of U.S. agricultural products, lowered the value of its currency and indicated that it may impose import tariffs on U.S. agricultural products. China’s escalation of the trade conflict with the United States is in response to the Trump Administration’s announcement last week that 10% tariffs would be imposed on all remaining Chinese-origin goods exported to the United States (valued at roughly $300 billion). President Trump’s most recent move stems from the assertion that China has not followed through on its promises to increase purchases of U.S. agricultural products and stop the flow of fentanyl to the United States.
The 10% tariffs on Chinese goods are expected to take effect on September 1st. Accordingly, the new tariffs, combined with the existing Section 301 tariffs will cover virtually all Chinese-origin products exported to the United States. It is likely that China chose to suspend the purchase of U.S. agricultural products and lower its currency because it cannot impose an equivalent tariff of its own on U.S. goods—China’s imports of U.S.-origin goods are less than its exports to the United States.
In June, President Trump and Chinese President Xi Jinping met at the G20 summit in Japan, and agreed to continue their trade negotiations. It was reported that, during those informal discussions, China agreed to purchase more U.S. agricultural products and stem the flow of fentanyl to the United States, while President Trump tweeted that the U.S. export restrictions on Huawei would be lifted pending the outcome of the trade negotiations.
If you have any questions relating to the Section 301 tariffs on China or other international trade issues, please contact Miller Proctor Law PLLC (https://millerproctorlaw.com ).
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