The United States will impose
additional tariffs on Chinese goods entering the country
from the start of September, according to US President Donald
Trump.
The new tariffs could hit shipments
of metals and minerals from China to the US and suppress
commodity consumption in China.
In comments on his Twitter account on
Thursday August 1, Trump said that "Trade talks are continuing,
and during the talks the U.S. will start, on September
1st, putting a small additional Tariff of 10% on the remaining
300 Billion Dollars of goods and products coming from China
into our Country. This does not include the 250 Billion Dollars
already Tariffed at 25%."
In comments made later that day to
reporters at the White House, Trump said that the period before
the new tariffs go into effect was to allow for existing
shipments to pass and was not meant to provide a window for
negotiations.
The decision to implement the additional
tariffs was a result of China’s failure to resume
purchases of US agricultural products and its continued
export of the illegal drug fentanyl, Trump said.
It is unclear what goods will be
included on the tariff list - in particular, whether the
10% tariff will apply to minerals that were initially included,
then removed, from the 25% tariff list that was announced
in September 2018 and put into effect in May 2019.
Goods that were excluded from this list
include several critical minerals that are produced
predominantly in China. Those minerals are antimony,
indium, barite, rare earths and refractory materials.
A tariff on any of these would
be significant since there are few alternative sources for
these goods.
"This time indium will get hit by this new
10% tariff and this will put even more pressure on Chinese
producers, which will need to sell at a significant discount to
maintain US share," an indium trader in the US said.
Other indium producers in the US view
the new duties as a positive, since they will be able to
increase their prices.
The tariffs also
raise the possibility of retaliation from China, including
a ban on exports of rare earths.
"If the US includes rare earths, they will
be shooting themselves in the foot," a rare earths trader said,
dismissing the notion of these materials being subjected
to any kind of duty. "If there is any restriction, China
will counteract."
As well as potentially affecting commodity
imports, the new tariffs are likely to hit almost all
manufactured goods transported from China to the US.
This is likely to suppress Chinese
manufacturing, hitting demand for several raw materials. For
example, the Chinese electronics industry is a key driver of
demand for rare earths, lithium and cobalt while soda ash
demand is tied to the Chinese glass industry.
Cristina Belda in London contributed
to this report.
(Refiling for technical
reasons)