- US president retaliates on same day that Beijing announces duties on US$75 billion of American products
US President Donald Trump said on Friday that he would increase tariffs on Chinese imports, the latest escalation on a day that saw him characterise Chinese President Xi Jinping as an "enemy" and call on American companies to stop doing business with China.
Trump's latest escalation in the bilateral trade war raises the 25 per cent rate on US$250 billion worth of goods to 30 per cent, effective October 1, and pushes the 10 per cent tariff on US$300 billion worth of goods to 15 per cent starting September 1.
The moves were Trump's full-throttle response to China's announcement earlier on Friday that it would assess tariffs of as much as 10 per cent on US$75 billion worth of American products.
For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight….
" Donald J. Trump (@realDonaldTrump) August 23, 2019
Trump's comments earlier in the day, which also included an "order" to Amazon, Federal Express, UPS and other logistics companies to search for the opioid fentanyl in shipments from China, sent stocks reeling and prompted calls from the US Chamber of Commerce and other industry associations for a cessation of the trade hostilities.
The Dow Jones Industrial Average closed down 2.6 per cent, losing more than 600 points to 25,628, after a series of tweets by the president. The Nasdaq dropped 3 per cent.
Trump announced the additional tariffs after the markets closed.
"Mr. President, we implore you to end this trade war before the damage is irreversible," Brian Dodge, chief operating officer of the Retail Industry Leaders Association, said in a statement following today's announcement of higher tariffs on US$550 billion worth of Chinese goods.
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"The President's continued escalation of tariffs has already rattled the U.S. market," Dodge said. "If uncertainty spreads from Wall Street to Main Street, the record expansion we're enjoying will undoubtedly come to an end and it will be the American consumer, not China, who will suffer."
However, a de-escalation in the trade hostilities is unlikely because neither side sees any political upside to offering concessions, said Bill Reinsch, a senior adviser in international business at the Washington-based think tank Centre for Strategic and International Studies.
Trump "wants to keep bullying China and China wants to keep telling the rest of the world that they are the good guy here," Reinsch said.
Ian Bremmer, president of the New York-based political consultancy, agreed.
Trump really doesn't want the economy to tank. But if he's headed for confrontation with China anyway (and he is), he'd rather take the hit way before elections.Implies escalation from US soon.
" ian bremmer (@ianbremmer) August 23, 2019
"Trump really doesn't want the economy to tank," Bremmer said in a Twitter post soon before news of the US leader's latest move. "But if he's headed for confrontation with China anyway (and he is), he'd rather take the hit way before elections. Implies escalation from US soon."
Trump's second barrage of tweets on Friday, which announced the higher tariffs on Chinese goods, did not explain how or when US companies would be expected to comply with his order earlier in the day to find "an alternative to China".
"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," he said.
In the meantime, US industry associations were left to defend their supply chains with China.
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"For two and a half years we have been promised a new and innovative approach, yet what we've been given is a 1930s trade strategy that will be a disaster for American consumers, American businesses and the American economy," Rick Helfenbein, president of the American Apparel & Footwear Association, said soon after Trump announced his latest tariff moves.
"Meanwhile, the president has said he wants American businesses to stop working in China, yet he doesn't seem to understand that moving a supply chain is incredibly complicated and expensive," Helfenbein said.
"It takes years to build relationships that meet compliance standards and deliver quality products, yet we have been given weeks and in this case days."
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