WASHINGTON — President Trump escalated his trade war with China on Thursday, saying that the United States would impose a 10 percent tariff on an additional $300 billion worth of Chinese imports after China failed to keep its promise to buy more American agricultural products.
Mr. Trump, who had agreed in June not to impose more tariffs while the two sides tried to reach a trade deal, said on Twitter that the new tariffs would go into effect on Sept. 1. Those new levies would be in addition to the 25 percent tariff that has already been imposed on $250 billion of imports and would essentially tax all Chinese products sent into the United States.
The latest round of tariffs, which will likely be met with reciprocal punishment by China, increases the likelihood that the world’s two largest economies will be locked in a protracted trade dispute for months, if not years. While both sides continue to negotiate, the United States has insisted that China agree to trade terms that it rejected in May, including cementing certain changes into Chinese law. Beijing has made clear that is unlikely to happen and has increasingly insisted it can wait out the trade war indefinitely. Mr. Trump, meanwhile, seems content to rattle the American economy, despite the economic and political consequences.
“We thought we had a deal with China three months ago, but sadly, China decided to renegotiate the deal prior to signing,” Mr. Trump said. “More recently, China agreed to buy agricultural product from the U.S. in large quantities, but did not do so.”
Mr. Trump said that China also did not fulfill its commitment to stop the sale of fentanyl into the United States.
The president’s comments hammered the stock market. The S&P 500 had been up 1 percent shortly before 1 p.m., with strong gains seen among technology companies such as semiconductor makers. But the market tumbled sharply after the threat to impose the new tariffs appeared on Twitter. The drop erased all the day’s gains and more, sending the benchmark stock index into the red. Shortly before 3 p.m. the S&P 500 was down slightly more than 1 percent.
Despite the additional tariffs, Mr. Trump said that the trade talks between the United States and China in Shanghai this week were “constructive” and that he looked forward to more “positive dialogue” between the countries.
Mr. Trump’s announcement comes just a day after the Fed lowered interest rates in part because of the ongoing spat with China. The quarter-point cut, the Fed’s first since the depths of the 2008 financial crisis, was meant to combat risks from weak global growth and trade policy uncertainty, Chair Jerome H. Powell said at a news conference following the decision.
“After simmering early in the year, trade policy tensions nearly boiled over in May and June, but now appear to have returned to a simmer,” he said Wednesday, explaining that the Fed was watching how things evolved as it considered whether and when future rate cuts are would be appropriate. “With trade policy we’re just going to be watching and trying to assess the implications for the U.S. outlook.”
Markets, which had pulled back their expectations for future rate cuts following Mr. Powell’s remarks, moved toward pricing in two more reductions by year-end following Mr. Trump’s tweets.
Jeanna Smialek contributed reporting from Washington and Matt Phillips contributed from New York.
- China vows to fight US 'at any cost' after Donald Trump threatens $100bn trade tariffs
- Trump says he won't get involved in the Russia investigation but 'I may change my mind'
- Trump says farmers will be better off after trade dispute
- Chinese exporters scramble to cope with coming tariff
- Trump’s flip-flops on trade are jarring but may produce results, experts say
- Trump Proposes Rejoining Trans-Pacific Partnership
- Trump says USA will rejoin Pacific trade pact if terms are improved
- Trump reassures farmers amid China trade dispute
- Trump proposes new tariffs on $100B in Chinese goods
- Steel tariff war – will China able to keep its dominance?