Earlier in 2018, the Office of the US Trade Representative (USTR) imposed a 25% added-value tariff on a set of particular Chinese-made products expected to valued at about $34 billion per year. A prior notice indicated a plan to increase the 25% tariff to $50 billion worth of goods (an additional $16 billion on Chinese goods ). Doing the math here – the US is planning here to collect $12.5 billion in tax revenue from the Chinese goods entering into the US. Although a tariff already applied to most Chinese imports, the rate is usually less than 5%.
As expected, in response to the US tariffs, China imposed increased duties on US goods.
The USTR has now proposed upping the bet — this time “in the form of an additional 10 percent ad valorem duty on products of China with an annual trade value of approximately $200 billion.” [FR Notice]. Easy math: the new 10% tax should raise an additional $20 billion in general revenue for the U.S. Government.
China cannot match this added tariff in direct parallel fashion – Since the U.S. only exports about $130 billion to China per year. However, China could instead collect the $20 billion with a higher duty; impose quotas; or apply some other non-tariff countermeasure (such as by adjusting IP rights owned by US entities).
In addition to each country’s unilateral measures, both countries (as well as our other global trading partners) have taken their cases to the World Trade Organization (WTO) asking for enforcement of the rules of The General Agreement on Tariffs and Trade (GATT) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).