America’s film and TV industries dodged a bullet Wednesday as China announced tariffs of about $50 billion against American goods. The measures were in retaliation against new U.S. tariffs on Chinese imports unveiled a day earlier.
China’s Commerce Ministry said it would increase import duties by 25% on 106 types of goods including soybeans, cars and light aircraft. The ministry said that it would announce the date for implementation separately, and that it would depend on the date that President Trump’s additional duties are imposed on Chinese exports to the U.S.
The maneuvers signal a significant lurch into a possible trade war between the world’s two largest economies. Trump has said he welcomes a trade war, contending that the U.S. loses out as a result of the Chinese trade surplus in physical goods. The U.S. has a surplus over China in service areas such as finance, software, and film and TV content.
The two countries are currently renegotiating a 6-year old agreement covering the film industry. They are believed to be close to a deal that would loosen China’s film import quotas, increase revenue-sharing terms for Hollywood rights owners, and likely increase the number of permitted distributors.
China’s retaliatory measures to date seem to have avoided the most headline-grabbing measures, such as penalizing the large passenger jets produced by Boeing or hitting out at Hollywood. China could be saving these for later if the trade dispute escalates.
For now, Beijing’s response seems targeted at Trump-voting constituencies. Soybeans are a major U.S. export to China and are predominantly sourced from red states on the U.S. political map. Other goods affected include beef, corn and orange juice.
The Chinese commerce ministry said that Tuesday’s U.S. moves were “an evident violation of the rules of the World Trade Organization.” It added that they threatened China’s economic interests and security.
Asian stock markets wobbled and the U.S. dollar weakened Wednesday. Hong Kong’s Hang Seng Index fell 2.2% to 29,518, and the Dow Jones Shenzhen Index fell 1.1% to 502.05. Before the opening bell at 7.30 a.m. in New York, stock futures pointed to a 460-point drop in the Dow Jones Industrial Average index.