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The Trump administration may be about to raise tariffs by more than 25% on $ 200 billion worth of Chinese products, exacerbating the confrontation between the two largest economies in the world and US companies that import handbags.
The administration may decide to start taxing imports – nearly 40 percent of all goods sold by China last year – after the end of the public comment period on Thursday.
The administration has already imposed tariffs of $ 50 billion on Chinese products, and Beijing has reduced tariffs by $ 50 billion on US products. These US products include soy and beef – a direct shot at supporters of President Donald Trump on the American farm. China plans to tax an additional $ 60 billion of US products if the Trump administration increases its $ 200 billion list of affected products.
Trump initiated the trade war to punish Beijing for what she said were China's predatory tactics in an attempt to supplant US technological supremacy. According to the Office of the US Trade Representative, these tactics include stealing trade secrets by hacking and forcing US companies to give up their technology in exchange for access to the Chinese market.
In the early days of hostilities, the administration targeted Chinese industrial imports in an attempt to save US consumers higher import costs. But if Trump adds the $ 200 billion of Chinese products to the target list, the American consumers would feel the effects directly. And China has promised to touch $ 60 billion of US products in retaliation.
Many US companies that rely on targeted Chinese imports are gearing up for the next round of tariffs, some wondering whether they can absorb the higher costs or rather pass them on to their customers or find alternative suppliers outside of China.
"An escalation of the tariff war could start disrupting or disrupting supply chains, reducing the efficiency of production, increasing costs and competitiveness, ultimately leading to a lower potential growth rate for producers. two countries, "wrote Wednesday analysts of S & P Global Ratings.
According to them, a generalized trade war by 2021 could reduce the annual economic output of the United States by an average of one third of a point and that of China by two tenths of points from 2019 to 2021. The war Commercial could cause further damage if It shakes the financial markets, which harms business confidence and risks discouraging investment.
Sherill Mosee, founder of MinkeeBlue, a Philadelphia-based company that manufactures travel and work bags, said her 4-year-old company will likely have to suspend operations if rates are in place and the administration begins to tax. luggage and handbags imported.
MinkeeBlue relies on inexpensive imports to sell for less than $ 200 an all-purpose bag for working women with shoes and a lunch bag. Mosee said that she would not be able to absorb higher import costs or pass them on to her clients. Finding a supplier outside of China would probably take months, she said.
"I'm scared, I'm overwhelmed," said Mosee. "I'm just starting to grow my business, I'm finally feeling good in the direction of the business and now it's happening."
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Innocenzio reported from New York. Christopher Rugaber, writer of AP Economics in Washington, contributed to this report.
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Follow Paul Wiseman on Twitter at https://twitter.com/PaulWisemanAP
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