US President Donald Trump on Friday announced 25 percent tariffs on tens of billions in Chinese imports, sparking immediate retaliation from Beijing and bringing the world’s two largest economies to the brink of an all-out trade war long feared by markets and industry.
Making good on a pledge to punish the alleged theft of American intellectual property, Trump warned in a statement of “additional tariffs” if China hit back with tit-for-tat duties on American goods and services exports.
“The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices,” Trump said in the statement.
“These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs.”
At least initially though, the new tariffs will not cover the full $50 billion that Trump threatened in March and repeated Friday.
China responded swiftly, saying it would imposed “equal” tariffs on US products.
“We will immediately launch tax measures of equal scale and equal strength,” the Ministry of Commerce said in a statement. It also called on other countries to “take collective action” against this “outdated and backwards behavior.”
US Trade Representative Robert Lighthizer said the United States would impose the punitive duties on 818 Chinese products valued at $34 billion starting July 6.
About 500 goods initially targeted for sanctions in March were stricken from the list at the behest of US firms that rely on imports.
The USTR announced second list of 284 targeted goods valued at $16 billion that will be subject to review and public comment.
If tariffs are imposed on the full amount that would bring the total goods sanctioned to $50 billion, but it is likely companies will seek more exemptions so the final total could fall short of that amount.
– Confrontation with key partners –
The announcement caps months of sometimes fraught shuttle diplomacy between Washington and Beijing, in which Chinese offers to purchase more US goods failed to assuage Trump’s grievances over the soaring trade imbalance and the country’s industrial development policies.
China’s Ministry of Commerce said the decision to impose tariffs mean “All previously agreed trade negotiation results are no longer valid.”
But the White House maintains that any Chinese countermeasures would be unjust and met with further US sanctions.
“We have taken essentially a defensive action,” a senior US official told reporters. “If they think that the appropriate response to this is further threats that are going to hurt other industries, I think that would be a mistake on their part.”
The official, who asked not to be identified, declined to say whether Trump would make good on a March threat to hit another $100 billion in Chinese goods with tariffs should Beijing retaliate.
Beijing in April put retaliatory duties on 128 US goods, including pork, wine and certain pipes in response to US tariffs on steel and aluminum imposed by Trump the month before.
Many businesses and governments share the US concern about Beijing’s efforts to gain industrial dominance in key sectors through forced technology transfers, the use of state funds to buy companies and raid their intellectual property as well as cybertheft.
But few support tariffs that will hurt US companies and consumers, and disrupt global trading rules.
And the China trade offensive is only one side of Trump’s multi-front confrontation with all major US economic partners.
Trump outraged Canadian, Mexican and European leaders last month by imposing punishing tariffs on imports of steel and aluminum to protect American producers from allegedly unfair competition.
Brussels, Ottawa, Beijing and Mexico City already have shown they intend to inflict damage on export industries in politically-sensitive districts — something which could prove damaging to Republicans already facing a loss of power in November’s mid-term elections.
The USTR acknowledged public concern that the tariffs list could raise prices for consumers.
“The list does not include goods commonly purchased by American consumers such as cellular telephones or televisions,” the office said.
But on Capitol Hill, influential Texas Republican lawmaker Kevin Brady, chair of a House tax legislation committee, said he was “alarmed” by the tariffs which he said exposed US industries to “devastating retaliation.”
“I am concerned that these new tariffs will hurt American manufacturers, farmers, workers and consumers,” he said.
And the influential US Chamber of Commerce warned that hundreds of thousands of Americans could lose their jobs if the trade war escalates, and includes tariffs on auto imports that Trump has threatened.
“If these actions continue, our businesses will lose customers, workers will lose jobs, and American consumers will lose family income through higher taxes and higher prices,” Chamber President Thomas Donahue said.
He also noted that the metals tariffs have pushed steel prices 40 percent higher since January.
Trump’s tariff announcement knocked Wall Street lower, with the benchmark Dow Jones Industrial Average having sunk a full percentage point shortly before 1500 GMT.
The selloff in New York followed an earlier plunge in Shanghai, where stocks fell to two-year lows.