Negotiating ploy or serious plan: Trump administration signals go ahead with tariffs on another $200 billion in Chinese goods

On Wednesday President Donald Trump ordered the administration’s trade office to consider imposing a 25% tariff on $200 billion in Chinese goods imported into the United States. The previous tariff proposal from the White House would have imposed a 10% tariff. Today Commerce Secretary Wilbur Ross seconded the administration’s plan to move ahead with the higher tariff rate on an expanded range of goods. “We have to create a situation where it’s more painful for them to continue their bad practices than it is to reform,” Ross said in an interview on Fox Business Network. The administration’s goal seems to be to force a change in China’s economic system, according to Ross. That’s seems a tall order and one that China will strongly resist.

The tariffs on that additional $200 billion in goods–at either rate–can’t go into effect until after hearings–currently scheduled for August 20 through 23 and a comment period that has been extended to September 5 from late August.

The Chinese government has responded by calling the proposed tariffs blackmail and vowing to strike back. “China is fully prepared and will have to retaliate to defend the nation’s dignity and the interests of the people, defend free trade and the multilateral system, and defend the common interests of all countries,” China’s Ministry of Commerce wrote in a statement released today on its website.

In his Fox interview Ross tried to have it two ways. First, he justified increasing the tariffs because only more pain would bring the needed changes from China and then, second, he noted that a 25% tariff “on $200 billion, if it comes to pass , is $50 billion a year. $50 billion a year on a $18 trillion [U.S.] economy” is a fraction of a percent, he said, adding “It’s not something that’s going to be cataclysmic.”

Of course, if it sets off a tit-for-tat trade war this new round of tariffs might be “cataclysmic” for the global economy–or at least for the developing economies that depend on U.S-China trade.