China Said to Assess Impact of Possible Punitive U.S. Tariffs

  • Companies asked to estimate highest duties they can bear
  • Donald Trump has accused China of unfair trade practices

China is asking companies this month to estimate the highest duties they can bear, according to people familiar with the matter, as the nation prepares for possible punitive U.S. tariffs.

Government departments are also asking Chinese companies that have large trade volumes with the U.S. to evaluate the impact should the U.S. label the nation a currency manipulator.

The world’s largest trading nation is bracing for tensions with U.S. President Donald Trump after he accused China of unfair trade practices throughout his campaign and threatened a range of punitive actions. Trump is assembling a cabinet that China’s state-run Global Times newspaper said would form an "iron curtain" of protectionism.

“China needs to have a good idea of its own conditions, for instance, which areas are the most vulnerable, so that we can get prepared in advance,” said Huo Jianguo, former director of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. “It is a reasonable and understandable preparatory step.”

Chinese shipments to the U.S. rose 9 percent from a year ago in January in dollar terms, according to data released on Friday. While America’s trade deficit with China narrowed to $347 billion in 2016, it is still the biggest and account for almost half of the total.

The people asked not to be identified because the information has not been made public. The Ministry of Commerce didn’t immediately reply to a fax requesting comment.

Campaign Pledges

Trump faces pressure to meet campaign pledges to get tough on China, which he accuses of draining America of manufacturing jobs. The billionaire real estate developer has promised to label China a currency manipulator, lodge trade complaints and impose tariffs if it doesn’t halt what he viewed were unfair trading practices.

In a step toward reducing tensions, Trump and his Chinese counterpart Xi Jinping had a phone call on Friday Beijing Time, the first since Trump took office on Jan. 20, and the American president reaffirmed the U.S.’s long-standing support for the ‘One-China’ policy. Xi said China is willing to boost ties with the U.S. including trade, state-run China Central Television said.

China has been preparing a basket of retaliatory options that include subjecting well-known U.S. companies to tax and antitrust probes should Trump wage a trade war, people familiar with the matter told Bloomberg in January.

— With assistance by Miao Han, and Steven Yang

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