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    China promises ‘countermeasures’ after Trump threatens additional 10% tariff

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    Donald Trump has threatened China with an additional 10% tariff on its exports to the US, prompting a promise of “countermeasures” from Beijing and setting the stage for another significant escalation in the two governments’ trade war.The US president also claimed he planned to impose tariffs on Canada and Mexico starting next Tuesday, having delayed their imposition last month after talks with his counterparts.Posting on Truth Social on Thursday, Trump said illicit drugs such as fentanyl were being smuggled into the US at “unacceptable levels” and that import taxes would force other countries to crack down on the trafficking.“We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled,” the Republican president wrote. “China will likewise be charged an additional 10% Tariff on that date.”If Trump makes good on this latest threat, the move would further strain relations between the US and its largest trading partners.In response, China’s commerce and foreign ministries on Friday vowed to retaliate if Chinese companies were affected by the tariffs, accusing the US of using fentanyl as a “pretext” to threaten China.“Such behaviour is purely ‘shifting blame and shirking responsibility,’ which is not conducive to solving its own problems,” a commerce ministry spokesperson said. “If the US insists on proceeding with this course of action, China will take all necessary countermeasures to safeguard its legitimate rights and interests.”Canada and Mexico have promised to retaliate if the US imposes tariffs on their exports. China hit back swiftly when Trump imposed a 10% tariff on its exports earlier this month.The Trump administration has repeatedly raised the threat of tariffs, vowing to rebalance the global economic order in the US’s favor. A string of announced measures have yet to be introduced, however, as economists and businesses urge officials to reconsider.The duties on imports from Canada and Mexico have been repeatedly delayed; modified levies on steel and aluminum will not be enforced until next month, and a wave of “reciprocal” tariffs, trailed earlier this month, will not kick in before April.This week, the US president vowed to slap 25% tariffs on the EU, claiming the bloc was “formed to screw the United States”, although details remain sparse. Duties will be applied “generally”, Trump said, “on cars and all other things”.The prospect of escalating tariffs has already thrown the global economy into turmoil – with consumers expressing fears about inflation worsening and the auto sector possibly suffering if the US’s two largest trading partners in Canada and Mexico are slapped with taxes.The prospect of higher prices and slower growth could create political blowback for Trump.Associated Press contributed reporting More

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      UK marketplace sellers face ‘second Brexit’ hit from Trump’s US import rules

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      Many UK-based independent sellers on marketplaces such as eBay and Amazon could suffer a significant hit to US sales from planned changes to import rules under Donald Trump, with experts comparing the impact to a second Brexit.The new rules, which mean all parcels originating or made in China and being sold into the US must pay import duty – of as much as 15% on fashion items – and an additional 10% tariff, are also expected to impact bigger online clothing retailers such as Asos and Boohoo.The changes were introduced at the start of February in an attempt to protect US retailers from a surge in competition from the likes of Chinese online marketplaces Shein and Temu, but were indefinitely paused after the US customs service struggled to cope with the massive increase in parcels requiring checks last week.However, they are expected to be implemented within the coming months, potentially driving up prices for US consumers and hitting sales for online retailers.Before the change, parcels with a value of less than $800 (£635) shipped to individuals in the US were exempt from import tax and did not pass through the usual customs checks. That scheme, originally designed to help smooth online shopping, is being revoked after it emerged that the number of shipments under the “de minimis” rules had ballooned to more than 1bn, valued at $54.5bn by 2023 – most of them from China or Hong Kong via firms including Shein and Temu.“You are looking at an increase of $30 to $50 per consignment [group of parcels],” said Brad Ashton at the advisory firm RSM. “It is creating a perfect storm for online retailers putting goods into the US market. It has a lot of the hallmarks of Brexit in terms of its potential impact on small traders.“Businesses will see their margins eroded because costs will increase. We may get to a point where the changes make a UK business uncompetitive in selling to the US.”The widespread use of Chinese factories for many British brands, particularly in fashion, means businesses such as Asos and Boohoo will be drawn in, as well as many UK independent marketplace sellers.It will not just affect goods made in China and then sent from the UK, but potentially a much wider array, as any package containing even one product made in China may have to pay import tax and pass through customs checks, further increasing costs, according to experts.There is also an expectation that the de minimis rules will eventually be scrapped for all imports, no matter their origin.About $5bn worth of parcels were exported to the US from the UK under de minimis rules in 2021, according to a Congressional Research Service analysis of data from US Customs and Border Protection. About 80% of that was estimated to be related to online retail, with fashion likely to be a large proportion of it.Chris White, at the logistics company Fulfilmentcrowd, said that during the brief period when the rules were in place in early February, one-third of the parcels it shipped to the US from the UK were found to be of Chinese origin and subject to the new taxes.Fast-fashion specialists Asos and Boohoo sell about £300m of clothing a year to the US. Both are already struggling to compete with the rise of Shein and high street retailers, which have revived after the Covid pandemic. John Stevenson, a retail analyst at Peel Hunt, said Asos and Boohoo would have to “adjust prices or take a view on [the] profitability of operating in the US”.As well as the higher tax charges, customs checks required after the rule change will add as much as two days to the processing of orders, making UK retailers less competitive with US-based operators on the speed of delivery.skip past newsletter promotionafter newsletter promotionStevenson said the hit to Asos and Boohoo was “not business-critical” in the way it could be for Shein or Temu, which he believed were heavily reliant on the tax benefit, but that it would have an impact.In the short term, online sellers will probably have lower sales because of uncertainty among US shoppers over possible taxes. White said that during the period when the new rules were in place, similar parcels were loaded with different levels of duty as local customs officers made different decisions.He said a further element of the rule change might be to expose brands that were “trading on an image of being British or European” as being “made in China and not Savile Row”, potentially damaging their appeal.There would be “lots of crossed fingers and puzzled faces” over the changes in legislation, with retailers potentially opening more US warehousing or, longer term, to switch sources of supply, White added.Boohoo closed its US warehouse earlier this year, and Asos is scheduled to close its facility there in November. However, a reversal could be on the cards if the de minimis rules are confirmed. Many fast-fashion companies have already diversified their supply chains – making more in India, Bangladesh or Turkey. Trump’s tax changes could accelerate this further.Shein is reportedly incentivising Chinese suppliers to set up in Vietnam, according to a report by Bloomberg.It is not clear when the new rules might be implemented as the US tries to put the technology and workforce in place to handle the new system. Experts say it could take weeks or months.While there is a chance that Trump will change his mind, as he has done on tariffs with Canada and Mexico, no business can bet on which way the US might jump. More

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      Chinese students in US tell of ‘chilling’ interrogations and deportations

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      Stopped at the border, interrogated on national security grounds, laptops and mobile phones checked, held for several hours, plans for future research shattered.Many western scholars are nervous about travelling to China in the current political climate. But lately it is Chinese researchers working at US universities who are increasingly reporting interrogations – and in several cases deportations – at US airports, despite holding valid work or study visas for scientific research.Earlier this month the Chinese embassy in Washington said more than 70 students “with legal and valid materials” had been deported from the US since July 2021, with more than 10 cases since November 2023. The embassy said it had complained to the US authorities about each case.The exact number of incidents is difficult to verify, as the US Customs and Border Protection (CBP) agency does not provide detailed statistics about refusals at airports. A spokesperson said that “all international travellers attempting to enter the United States, including all US citizens, are subject to examination”.But testimonies have circulated on Chinese social media, and academics are becoming increasingly outspoken about what they say is the unfair treatment of their colleagues and students.“The impact is huge,” says Qin Yan, a professor of pathology at Yale School of Medicine in Connecticut, who says that he is aware of more than a dozen Chinese students from Yale and other universities who have been rejected by the US in recent months, despite holding valid visas. Experiments have stalled, and there is a “chilling effect” for the next generation of Chinese scientists.The number of people affected is a tiny fraction of the total number of Chinese students in the US. The State Department issued nearly 300,000 visas to Chinese students in the year to September 2023. But the personal accounts speak to a broader concern that people-to-people exchanges between the world’s two biggest economies and scientific leaders are straining.The refusals appear to be linked to a 2020 US rule that barred Chinese postgraduate students with links to China’s “military-civil fusion strategy”, which aims to leverage civilian infrastructure to support military development. The Australian Strategic Policy Institute thinktank estimates that 95 civilian universities in China have links to the defence sector.Nearly 2,000 visas applications were rejected on that basis in 2021. But now people who pass the security checks necessary to be granted a visa by the State Department are being turned away at the border by CBP, a different branch of government.“It is very hard for a CBP officer to really evaluate the risk of espionage,” said Dan Berger, an immigration lawyer in Massachusetts, who represents a graduate student at Yale who, midway through her PhD, was sent back from Washington’s Dulles airport in December, and banned from re-entering the US for five years.“It is sudden,” Berger said. “She has an apartment in the US. Thankfully, she doesn’t have a cat. But there are experiments that were in progress.”Academics say that scrutiny has widened to different fields – particularly medical sciences – with the reasons for the refusals not made clear.X Edward Guo, a professor of biomedical engineering at Columbia University, said that part of the problem is that, unlike in the US, military research does sometimes take place on university campuses. “It’s not black and white … there are medical universities that also do military. But 99% of those professors are doing biomedical research and have nothing to do with the military.”But “if you want to come to the US to study AI, forget it,” Guo said.skip past newsletter promotionafter newsletter promotionOne scientist who studies the use of artificial intelligence to model the impact of vaccines said he was rejected at Boston Logan International airport. He was arriving to take up a place at Harvard Medical School as a postdoctoral researcher. “I never thought I would be humiliated like this,” he wrote on the Xiaohongshu app, where he recounted being quizzed about his masters’ studies in China and asked if he could guarantee that his teachers in China had not passed on any of his research to the military.He did not respond to an interview request from the Observer. Harvard Medical School declined to confirm or comment on the specifics of individual cases, but said that “decisions regarding entry into the United States are under the purview of the federal government and outside of the school’s and the university’s jurisdiction.”The increased scrutiny comes as Beijing and Washington are struggling to come to an agreement about the US-China Science and Technology Agreement, a landmark treaty signed in 1979 that governs scientific cooperation between the two countries. Normally renewed every five years, since August it has been sputtering through six-month extensions.But following years of scrutiny from the Department of Justice investigation into funding links to China, and a rise in anti-Asian sentiment during the pandemic, ethnically Chinese scientists say the atmosphere is becoming increasingly hostile.“Before 2016, I felt like I’m just an American,” said Guo, who became a naturalised US citizen in the late 1990s. “This is really the first time I’ve thought, OK, you’re an American but you’re not exactly an American.”Additional research by Chi Hui Lin More

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      Biden’s China investment ban: who’s targeted and what does it mean for the 2024 US election?

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      Joe Biden has moved to restrict US investment in Chinese technology, signing an executive order which focuses on a few, sensitive hi-tech sectors including semiconductors, quantum computing and artificial intelligence (AI).It is the latest in a series of measures taken by the US to restrict China’s access to the most advanced technology and comes as the president has embarked on a multi-state tour of the south-west to tout his plans to revive American manufacturing after decades of decline.The restrictions are expected to take effect next year – and come at a sensitive time in the US-China relationship. The Biden administration has launched diplomatic overtures to Beijing in recent months, seeking to mend ties after a series of incidents, while still attempting to bolster its position against China on military, economic and technological fronts.What are the latest restrictions?As a result of previous Biden administration measures, the US already bans or restricts the export to China of many of the technologies covered in these new measures. The aim of Wednesday’s executive order is to prevent US funds from helping China build its own domestic capabilities, which could undermine the existing export controls.Under the executive order, the US Treasury has been directed to regulate certain US investments in semiconductors and microelectronics, quantum computing and artificial intelligence.China, Hong Kong and Macau are listed as the “countries of concern”, but a senior Biden official has told Reuters other countries could be added in the future.The rules are not retroactive and apply to to future investments, with officials saying the goal is to regulate investments in areas that could give China military and intelligence advantages.Britain and the European Union have signalled their intention to move along similar lines, and the Group of Seven advanced economies agreed in June that restrictions on outbound investments should be part of an overall toolkit.Biden’s plan has been criticised by Republicans, many of whom say it does not go far enough.Republican Senator Marco Rubio has called it “almost laughable”, adding that the plan is “riddled with loopholes … and fails to include industries China’s government deems critical”, he said.How has China reacted?A spokesperson for the Chinese embassy in Washington said the White House had ignored “China’s repeated expression of deep concerns” about the plan.The embassy warned that it would affect more than 70,000 US companies that do business in China, hurting both Chinese and American businesses.The country’s commerce ministry said it reserved the right to take countermeasures and encouraged the US to respect the laws of market economy and the principle of fair competition.What part do these measures play in Biden’s re-election bid?As the executive order was made public, Biden was speaking in New Mexico, touting his government’s success in boosting manufacturing jobs in the renewable energy sector.“Where’s it written that America can’t lead the world again in manufacturing? Because we’re going to do just that,” Biden said at the groundbreaking of a new factory manufacturing wind turbine towers in the city of Belon.“Instead of exporting American jobs, we’re creating American jobs and we’re exporting American products,” he added.However, polling shows that for many, the perception of the president’s economic policies – “Bidenomics” as his communications team likes to call them – are at odds with a range of positive indicators. US inflation has dropped to the lowest levels since 2021 and the administration has repeatedly touted months of consistent jobs growth; despite this though multiple polls show that only a minority of Americans support Biden’s handling of the economy.The cornerstone of Biden’s refreshed bid to voters are two major bills he shepherded through Congress and signed into law a year ago: the Chips and Science Act – which pumps huge funding into semiconductor manufacturing, research and development – and the Inflation Reduction Act (IRA), a law for megaprojects boosting green investment.The chips act aims to further freeze China’s semiconductor industry in place, while pouring billions of dollars in subsidies into the US chip industry.Both laws, along with the growing restrictions on Chinese industry, are positioned to win back portions of the working-class vote who felt left behind by globalisation and turned to Donald Trump at previous elections.What’s next?The ban is a step in a broad and ongoing push to undermine China’s efforts to achieve independence in a number of technological areas, in particular the development of advanced semiconductors.In recent months, the US government has signalled it still wants to close some loopholes Chinese businesses are using to get their hands on the most advanced semiconductors.In response to previous chip bans, Nvidia one of the world’s leading chip companies, has started offering a less advanced chip, the A800, to Chinese buyers. But new curbs being considered by Washington would restrict even those products.In possible anticipation of such a move China’s tech giants – including Baidu, TikTok-owner ByteDance, Tencent and Alibaba – have made orders worth $1bn to acquire about 100,000 A800 processors from the Nvidia to be delivered this year, the Financial Times has reported.The Chinese groups had also bought a further $4bn worth of graphics processing units to be delivered in 2024, according to the report.Reuters and Agence France-Presse contributed to this report More

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      US Senate approves $50bn boost for computer chip and AI technology to counter China

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      The US Senate has overwhelmingly approved a bill to boost American semiconductor production and the development of artificial intelligence and other technology in the face of growing international competition, most notably from China.The 68-32 vote for the bill on Tuesday demonstrates how confronting China economically is an issue that unites both parties in Congress. It is a rare unifying issue in an era of division as pressure grows on Democrats to change Senate rules to push past Republican opposition and gridlock.The centerpiece of the bill is a $50bn emergency allotment to the US commerce department to boost semiconductor development and manufacturing through research and incentive programs previously authorised by Congress. Overall, the bill would increase spending by about $250bn, with most of the spending occurring in the first five years.The bill now heads to the House of Representatives, which earlier passed a different version. The two will have to be reconciled into a single bill before it is sent to the White House for the president’s signature.Joe Biden said he was “encouraged” by the Senate’s passage of the United States Innovation and Competition Act.“We are in a competition to win the 21st century, and the starting gun has gone off,” Biden said.“As other countries continue to invest in their own research and development, we cannot risk falling behind. America must maintain its position as the most innovative and productive nation on Earth.”Supporters described the bill as the biggest investment in scientific research that the country has seen in decades. It comes as the nation’s share of semiconductor manufacturing globally has steadily eroded from 37% in 1990 to about 12% now, and as a chip shortage has exposed vulnerabilities in the US supply chain.“The premise is simple, if we want American workers and American companies to keep leading the world, the federal government must invest in science, basic research and innovation, just as we did decades after the second world war,” said Senate majority leader, Chuck Schumer.“Whoever wins the race to the technologies of the future is going to be the global economic leader, with profound consequences for foreign policy and national security as well.“If we do nothing, our days as the dominant superpower may be ending. We don’t mean to let those days end on our watch. We don’t mean to see America become a middling nation in this century.”The bill has a number of other China-related provisions, including prohibiting the social media app TikTok from being downloaded on government devices, and would block the purchase of drones manufactured and sold by companies backed by the Chinese government.It would also allow diplomats and Taiwanese military to display their flag and wear their uniforms while in the US on official businesses, and creates broad new mandatory sanctions on Chinese entities engaged in US cyberattacks or theft of US intellectual property from US firms. It provides for a review of export controls on items that could be used to support human rights abuses.The Senate minority leader, Mitch McConnell, backed the bill but said it was incomplete because it did not incorporate more Republican-sponsored amendments.“Needless to say, final passage of this legislation cannot be the Senate’s final word on our competition with China,” he said. “It certainly won’t be mine.”Senators slogged through days of debates and amendments leading up to Tuesday’s final vote. Schumer’s office said 18 Republican amendments will have received votes as part of passage of the bill. It also said the Senate this year has already held as many roll call votes on amendments than it did in the last Congress, when the Senate was under Republican control.While the bill enjoys bipartisan support, a core group of Republican senators has reservations about its costs.One of the bill’s provisions would create a new directorate focused on artificial intelligence and quantum science with the National Science Foundation. The bill would authorize up to $29bn over five years for the new branch within the foundation, with an additional $52bn for its programs.Rand Paul, a Republican senator for Kentucky, said Congress should be cutting the foundation’s budget, not increasing it. He called the agency “the king of wasteful spending”. The agency finances about a quarter of all federally supported research conducted by America’s colleges and universities.The lead Republican on the committee also weighed in to support the bill.“This is an opportunity for the United States to strike a blow on behalf of answering the unfair competition that we are seeing from communist China,” said Roger Wicker.Senators have tried to strike a balance when calling attention to China’s growing influence. They want to avoid fanning divisive anti-Asian rhetoric when hate crimes against Asian Americans have spiked during the coronavirus pandemic.Senators added provisions that reflect shifting attitudes toward China’s handling of the Covid-19 outbreak. One would prevent federal money for the Wuhan Institute of Virology as fresh investigations proceed into the origins of the virus and possible connections to the lab’s research. The city registered some of the first coronavirus cases. More