US increases tariffs on China, retail to suffer

US President Donald Trump has imposed a 10 per cent tariff against US$200 billion worth of goods from China, which is set to increase to 25 per cent at the beginning of 2019.

The President added that should China wish to retaliate, as it promised last week, the US will immediately begin preparing tariffs on a further US$267 billion of imports.

Expressing fear that these tariffs will affect Australians, Labor Frontbencher Brendan O’Connor noted there was “never a dull moment” in regard to the ongoing trade war.

“There will be ramifications – the extent and nature of which we don’t know yet – but there’ll be some impact on Australia,” O’Connor told Sky News.

“The retaliation is going to ripple through this region, without a shadow of a doubt.”

GlobalData Retail managing director Neil Saunders noted that the fact the tariffs are only at 10 per cent is good news.

“This will still increase prices, but it does mean that the steeper rate of 25 per cent will not be introduced before or during the critical holiday season,” Saunders said.

“However, should an agreement between China and the US not be found before the New Year, retailers could well start 2019 on a gloomy note.”

Saunders went on to point out that while the decision may be sound politically it would cause pain to the retail industry and the consumer.

President Trump tweeted that, moving forward, if countries do not make fair deals with the US there will be further tariffs imposed.

Trade Minister Simon Birmingham told ABC radio the Australian government has consistently urged parties not to pursue unilateral tariff actions.

“Tariffs ultimately result in consumers paying more and disruptive trade practices ultimately hurt economies rather than help them,” Birmingham said.

“That’s why we urge everybody … to think carefully about the consequences of doing so, to recognise that hurts their economies, it has possible negative impacts on other economies.

“It means consumers end up paying more, taxpayers end up subsidising more. They’re not good things.”

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