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Trump’s Tariffs Hike on Chinese Goods Alarm US Lawmakers

Trump announced that tariffs on $200 billion of Chinese goods would rise from 10% to 25%

tariffs, chinese goods
FILE -Soybeans are offloaded from a combine during the harvest in Brownsburg, Ind., Sept. 21, 2018. President Donald Trump announced new tariffs on Chinese goods, which could prompt China to retaliate on U.S. farm products. VOA

U.S. President Donald Trump’s intention to further hike U.S. tariffs on Chinese goods has alarmed American lawmakers of both parties who fear dire economic consequences from escalating tensions between the United States and its trading partners.

“I’m anxious for the tariff war to come to an end,” Republican Sen. Jerry Moran of agriculturally rich Kansas told VOA on Tuesday. “Exports are very important to the economy of my state. I would encourage the rapid resolution between the United States and China, because it has an immediate and consequential effect on the livelihoods of lots of people.”

“The [president’s] whole tariff policy has been dangerous folly,” New Jersey Democratic Sen. Robert Menendez said. “I hear it from New Jersey companies that recently, just this past week, told me about tariffs they have to pay on particular products that they can’t get anywhere else [but foreign suppliers].”

tariffs, chinese goods
A mannequin showcases a clothing by Forever 21, an American fast fashion retailer that is offering clearance discounts after it pulled out from China’s market, at a shopping mall in Beijing, May 7, 2019. VOA

Who’s paying?

On Sunday, Trump announced that tariffs on $200 billion of Chinese goods would rise from 10% to 25% as of Friday. He tweeted that “China has been paying” U.S. tariffs and that China’s “payments are partially responsible for our great economic results.”

Such assertions are disputed by many lawmakers, including Republicans who, on other matters, often come to the president’s defense.

“Currently, U.S. importers have paid the U.S. government over $16 billion in tariffs on imports from China,” Oklahoma Republican Sen. James Lankford said via Twitter. “This tax is not paid for by Chinese exporters, this is all paid by U.S. importers.”

tariffs, chinese goods
Chinese Vice Premier Liu He, right, gestures as U.S. Treasury Secretary Steven Mnuchin, center, chats with his Trade Representative Robert Lighthizer, left, before they proceed to their meeting at the Diaoyutai State Guesthouse in Beijing, May 1, 2019. VOA

Trade talks to continue

Despite Trump’s tariff threat, Chinese officials have signaled they intend to continue trade discussions with Washington, prompting some lawmakers to applaud what they see as the White House’s hardball negotiating stance toward Beijing.

“The only reason that China is at the [negotiating] table is because of these tariffs, let’s not kid ourselves,” Republican Sen. John Kennedy of Louisiana said. “China has been cheating … and it’s got to stop. And President Trump has been the first president to call their hand.”

Some Democrats, meanwhile, credit Trump for confronting China over its trade practices but fault the strategy and tactics the president has employed.

“I commend President Trump for saying the status quo with China is not working,” Virginia Democratic Sen. John Warner said. “China is not playing by the rules, and my fear is the president may end up with a deal where the president sells an extra $100 billion of [American] soybeans, but these broader issues around technology … and [China’s] ongoing theft of intellectual property go unaddressed.”

“Tariff policy by tweet does not work,” said Massachusetts Sen. Elizabeth Warren, who is seeking next year’s Democratic presidential nomination. “We’ve had two years of experience now [with Trump], and it just seems to be getting worse and worse.”

tariffs, chinese goods
Cars and trucks line up to enter Mexico from the U.S. at a border crossing in El Paso, Texas, March 29, 2019. VOA

Beyond China

Tariff concerns on Capitol Hill extend beyond China. A group of Republican lawmakers has urged Trump to halt tariffs targeting Canadian and Mexican goods, warning the measures could torpedo Congress’s consideration of a newly negotiated free trade pact between the United States and both nations.

Regarding the president’s new tariff threat on Chinese exports, some Republicans are willing to give the president the benefit of the doubt — for now.

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“Perhaps the president is espousing additional tariffs for purposes of getting China’s attention and to negotiate an agreement. That would be a wonderful outcome,” Moran said. “The challenge is: it’s not just one country that can impose tariffs. So, when the United States [previously] imposed tariffs, China retaliated on products from the United States. And that is very damaging to the ability to earn a living.” (VOA)

Next Story

Delhi Has Higher Power Tariffs Than Goa, Arunachal Pradesh, J&K

The Delhi government recently announced that it would not charge any fee on power bills of up to 200 units, following which CM Arvind Kejriwal said that Delhi has the cheapest power tariffs

India, J&K, Power, Sector, Development
The government proposes to unbundle the department to break it into four profit-oriented companies. Pixabay

The Delhi government recently announced that it would not charge any fee on power bills of up to 200 units, following which Chief Minister Arvind Kejriwal said that Delhi has the cheapest power tariffs in the country.

Although the government is subsidising power bills in the state, a look at tariff rates across the country, however, shows that some other states have lower tariff rates than the national capital.

Data show that power tariffs in Goa, Arunachal Pradesh and the Union Territories of Jammu and Kashmir and Ladakh are lower than Delhi for up to 400 units of consumption, the range generally consumed by most households.

In the national capital, power tariffs as set by the Delhi Electricity Regulatory Commission (DERC) are: Rs 3 per unit up to consumption of 200 units, and Rs 4.5 per unit for the range of 201-400 units.

This rate has been fixed by the DERC and has remained stagnant for the past three years. But with the subsidy announced this year, the tariff for FY20 has become nil for up to 200 units of consumption.

In Goa, 1-100 units cost at the rate of Rs 1.4 per unit and Rs 2.1 is charged per unit in the range of 101-200 units with an average rate of Rs 1.75 per unit up to 200 units.

In Arunachal Pradesh, people under the ‘below poverty line’ category have to pay Rs 2.65 per unit and in general, tariff is charged at Rs 4 per unit. Further, in the Union Territories of Jammu and Kashmir and Ladakh, power tariff for the range of 1-100 units is Rs 1.54 per unit and Rs 2 per unit for the range of 101-200 units.

The Jammu Kashmir Electricity Regulatory Commission charges Rs 3 per unit for consumption of 201-400 units.

In July this year, Delhi Chief Minister Arvind Kejriwal announced free power for consumers using up to 200 units of electricity per month. He also announced that power consumption between 200 and 400 units would get 50 per cent rebate for the benefit of lower to medium income consumers.

This discount came on the behest of subsidies given by the Delhi government.

Further, the average cost at which distribution companies buy power is also higher in Delhi compared to several other states.

The average cost of power procurement in Delhi is Rs 3.90 per unit. This is even higher than the national average of Rs 3.60 per unit. Discoms in around 21 states and Union Territories buy power at an average price lesser than that in the national capital.

Delhi, India, Power, Tariffs
Delhi Chief Minister Arvind Kejriwal announced free power for consumers using up to 200 units of electricity per month. Wikimedia Commons

This shows that although power is significantly subsidised in Delhi, the discoms in the national capital buy power at higher rates. High cost of power does not provide a conducive situation for subsidies and the exchequer in Delhi would have to bear the financial burden over the recently announced rates.

In the financial year 2019-20, the Delhi government has allocated Rs 1,720 crore (out of Rs 1,790 crore under energy sector) for providing subsidies to consumers through power distribution companies (DISCOMs).

A look at the tariff approved by the Delhi Electricity Regulatory Commission for FY20 shows that electricity charges for the first 200-unit consumption remains static at Rs 3 per unit, for 200-400 units it is same as Rs 4.5 per unit, for 400-800 units its is Rs 6.5 per unit, and the only change this year for domestic consumer is that electricity consumption beyond 1,200 units has been raised from Rs 7.75 per unit to Rs 8 per unit.

With free power, Delhi has notably become the state with cheapest electricity tariff in that category as there is no further scope for cuts. But in this category too, Delhi is not alone as states like Chhattisgarh, Punjab, Bihar and Haryana have provided subsidy from the state budget to keep electricity tariff low despite state regulatory commissions approving higher tariff as part of the efforts to bring the charges closer to the cost and help discoms get over their chronic financial problems.

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Industry experts said that electricity tariffs have to be revised upwards in most states given the rise in coal prices and the general inflation.

“It is most unfortunate that state governments are using low electricity charges as a plan to woo voters. If the charges were low due to the system and operational improvement among discoms, no one would have complained. But the fact remains that discoms in Delhi continue to sit on high regulatory assets while the government decides to subsidise electricity from budget,” said a power sector expert, asking not to be named.

Last year, the Arvind Kejriwal-led government had provisioned Rs 1,815 crore for the energy sector. The move to offer free power has shaken up the power sector. The announcement shatterd the hopes of a shift to market-driven policies easing the pressure on power distribution utilities. Although it provides relief to the common man, such moves may further impact the country’s beleaguered power sector and the subdued overall economy. (IANS)