US President Trump has decided to impose tariffs on US$200 billion (NZ$305 billion) in Chinese goods, two people briefed on the decision said, one of the most severe economic restrictions ever imposed by a US president.

An announcement is expected to come within days, the people said, speaking on the condition of anonymity because they weren't authorised to discuss internal plans.

The new tariffs would apply to more than 1000 products, including smartphones, televisions and toys. These penalties could drive up the cost of a range of products ahead of the holiday shopping season, though it's unclear how much.

Trump has ordered aides to set the tariffs at 10 per cent, likely leading to higher prices for American consumers. These tariffs are paid by US companies that import the products, though they often pass the costs along to US consumers in the form of higher prices.

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The US imports roughly $500 billion in Chinese goods each year, and — combined with existing tariffs — these new penalties would cover half of all goods sent to the US from China each year.

The 10 per cent tariff is scaled back from Trump's initial plan to impose 25 per cent penalties on all of these imports. But the impact will still likely be felt by millions of American consumers.

A White House spokesman didn't immediately respond to a request for comment on Saturday afternoon.

On Friday, White House spokeswoman Lindsay Walters said "the President has been clear that he and his administration will continue to take action to address China's unfair trade practices. We encourage China to address the long standing concerns raised by the United States. "

All of Trump's top advisers have been united in his effort to push China to change it economic practices, but they have been split on his tactics. Some have advocated a more cautious, diplomatic approach. But Trump has signalled that he believes only the threat of real economic pain will coerce Beijing into major changes. He has recently boasted that he believes China's economy is suffering because of his hard-charging style.

Trump has accused China of a number of unfair trade practices, and he has threatened to impose tariffs on all Chinese imports if changes aren't made. He wants China to buy more American products, open up China to more US investment, and stop stealing US intellectual property, among other things.

Trade between China and the US is set to become even more difficult following these tariffs. Photo/123RF.
Trade between China and the US is set to become even more difficult following these tariffs. Photo/123RF.

The tariffs come as a number of top White House advisers have been trying to de-escalate tensions between Trump and Chinese leader Xi Jinping. Treasury Secretary Steven Mnuchin was planning to restart talks with Chinese leaders soon, but they have vowed to retaliate to any escalation of the trade battle between the two countries with punitive steps of their own, and Trump's move could further push Beijing to retaliate.

The decision was first reported by the Wall Street Journal.

Trump has tried to use tariffs as a way to penalise a number of countries this year, including Mexico, Japan, Canada, and members of the European Union, hoping that the threat of driving up costs on their products will make them more open to his demands. This tactic has had mixed success.

Trump first imposed tariffs on roughly $50 billion in Chinese products, and the list of products mostly included industrial equipment to not directly impact consumers.

China responded by imposing tariffs on US products like beef and soybeans, a response that spooked the US agriculture industry and angered Trump and other White House officials. Trump responded this summer by ordering his advisers to come up with a list of $200 billion in other Chinese products to penalise, a package of products that includes many consumer products.

And two weeks ago he said he is preparing a third package of penalties on what he said would be $267 billion in additional items, a list that likely encompasses all remaining goods produced in China.

"For the near term, this combination of tactics seems to signal that unless and until China comes to the table with significant actions on the issues the US is hammering, the US will keep tariff pressure going," said Claire Reade, a former US trade negotiator. "Talks without action won't do the trick. The open question, of course, is how much action is enough and can China find a way to move that will be seen as being in its own interest, not kowtowing to the US.

The US ran a $233.5 billion deficit in goods trade with China during the first seven months of the year, an 8 percent increase compared with the same period in 2017.

Corporate executives increasingly believe the trade dispute can only be resolved by direct talks between Trump and Xi. The two leaders may see other at the United Nations General Assembly in New York later this month and are scheduled to meet on the sidelines of the G-20 summit in Buenos Aires in November.

The two leaders may see other at the United Nations General Assembly in New York later this month and are scheduled to meet on the sidelines of the G-20 summit in Buenos Aires in November.