Caixin
Aug 24, 2019 06:51 AM
ECONOMY

Trump Threatens Higher Tariffs in Trade War Escalation

Photo: VCG
Photo: VCG

U.S. President Donald Trump struck back with a threat of more tariff increases hours after Beijing announced a plan to place new taxes on $75 billion of annual American imports, further escalating the trade war between the world’s two largest economies.

“Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%,” Trump wrote on Twitter after the market close.

In addition, a 10% tariff to be imposed on $300 billion of Chinese goods scheduled for Sept.1 will be increased to 15%, he wrote.

"China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!)," Trump tweeted.

China said late Friday Beijing time it would impose additional 5% or 10% tariffs on American goods in two batches, in response to a Trump plan to charge 10% tariffs on almost $300 billion of Chinese shipments.

China’s new tariffs will affect 5,078 tariff lines including American soybeans, crude oil imports, automobiles and pork products. The first batch of tariffs will apply to 1,717 tariff lines starting next month and the second batch to 3,361 in December, according to a statement issued by China’s Ministry of Finance.

Trump lashed out with a slew of tweets following Beijing’s announcement, pledging to retaliate.

"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 said in one tweet Friday morning.

Wall Street took a nosedive Friday on deepening trade war fears. The Dow Jones Industrial Average closed down 623 points, or 2.37%, after falling as much as 700 points. The S&P 500 Index finished 2.6% lower, and the Nasdaq Composite lost 3%.

Friday’s moves marked a sudden escalation of tensions between China and the U.S. after months of tough negotiations. Top trade officials from the two countries completed the latest round of trade talks in Shanghai in early August without any progress. Trump threatened to apply 10% tariffs to $300 billion a year of Chinese goods starting Sept. 1, although the two sides agreed to continue talks next month in Washington.

Trump last week said he would delay part of the planned tariffs on certain consumer goods from China until mid-December.

“This decision shows that there are no winners in a trade war,” China’s Ministry of Commerce spokesperson Gao Feng said at a Thursday press briefing.

Any enforcement of new U.S. tariffs will further escalate tensions, and China will have to take countermeasures, Gao said Thursday. This will hurt U.S. customers and companies and even increase the chances of a global recession, he said.

China was the top trading partner of the U.S. between 2015 and 2018, but the deepening tariff war has taken a toll on relations in the first half of 2019 as bilateral exports and imports slumped.

China fell to third place in the U.S. trade table in the January-June period, with the total value of goods bought and sold between the two countries falling to $289.7 billion, behind $311.5 billion recorded with Mexico and $305.6 billion with Canada, according to the U.S. Census Bureau.

The U.S. exported $54.9 billion of goods to China in the first half of 2019, an 18.1% decline from the $67.1 billion reported for the same period last year. Meanwhile, imports from China fell 12.2% to $234.8 billion.

Contact reporter Han Wei (weihan@caixin.com)

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