US President Donald Trump on Friday slaps an additional 5 per cent tariffs on $550 billion worth of Chinese goods and said he was ordering US firms to look at ways to close their operations in China and make more of their products in the US, in the latest tit-for-tat trade war escalation by the world’s two largest economies.
The move came hours after China unveiled retaliatory tariffs on $75 billion worth of American products.
The intensifying trade war stoked market fears that the global economy will tip into recession, sending US stocks into a tailspin, with the Nasdaq Composite down 3 per cent, and the S&P 500 down 2.6 per cent. US Treasury yields dropped as investors sought safe-haven assets, and crude oil, targeted for the first time by Chinese tariffs, tumbled.
Trump said the US would raise its existing tariffs on $250 billion worth of Chinese imports to 30 per cent from the current 25 per cent starting on Oct. 1 and the planned tariffs on the remaining $300 billion worth of Chinese goods will be increased to 15 per cent from 10 per cent.
China announced retaliatory tariffs on $75 billion of US goods including soybeans, automobiles and crude oil, in response to US President Donald Trump’s latest planned levies on Chinese imports sending US stock futures tumbling.
Some of the countermeasures will take effect starting Sept. 1, while the others will come into effect from Dec. 15, according to the announcement from the Ministry of Commerce.
The latest salvo from China comes after the United States unveiled tariffs on an additional $300 billion worth of Chinese goods, including consumer electronics, scheduled to go into effect in two stages on Sept. 1 and Dec. 15.
An extra 5 per cent tariff will be placed on US soybeans and crude-oil imports starting next month. The resumption of a suspended extra 25 per cent duty on US cars will resume Dec. 15, with another 10 per cent on top for some vehicles. With existing general duties on autos taken into account, the total tariff charged on vehicles made in the US would be as high as 50 per cent.
Beijing’s announcement sharply escalates the trade tensions between the world’s two largest economies and intensifies concerns about a global growth outlook that’s already looking shaky.
China’s announcement comes ahead of the meeting of leaders from the Group of Seven nations in France and central bankers gather in Jackson Hole, Wyoming, to discuss issues such as the global slowdown.
“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” Trump wrote on Twitter. “We don’t need China and, frankly, would be far better off without them.”
The US Chamber of Commerce rebuffed Trump’s suggestion, saying that “while we share the president’s frustration, we believe that continued, constructive engagement is the right way forward.”
White House trade adviser Peter Navarro said on Friday that the trade war will cause higher prices or a slower economy in the US.
“China is bearing the entire burden by slashing their prices, by slashing their currency value and by the way they are hemorrhaging, hemorrhaging their supply chain out to the rest of the world and back here to America,” he said. “And that’s good for America.”
“Negotiations will continue, as they have been. They will be done behind closed doors.”