WASHINGTON (AP) — In response to China’s recent action, President Donald Trump Friday raised tariffs with China and ordering American companies to consider alternatives to doing business there.
Trump’s move came after Beijing announced Friday morning that it had raised taxes on U.S. products.
The stock market went sharply lower on the eve of his trip to France for a meeting of global economic powers.
Believing the market had overreacted, Trumpe mockingly attributed a Wall Street drop of 573 points to the withdrawal of a marginal candidate from the Democratic presidential race. The Dow Jones average eventually closed down 623 points.
The president attacked the Fed for not lowering rates at an informal gathering in Jackson Hole, Wyoming, where no such action was under consideration. Powell, speaking to central bankers, gave vague assurances that the Fed would act to sustain the nation’s economic expansion, but said that the central bank had limited tools to deal with damage from the trade dispute.
Trump said he would be raising planned tariffs on $300 billion in Chinese goods from 10% to 15%.
The Office of the U.S. Trade Representative also said existing tariffs on another $250 billion in Chinese imports would go from 25% to 30% on Oct. 1 after receiving feedback from the public.
Late Friday night, Trump told reporters at the White House: “I have no choice. We’re not going to lose close to a trillion dollars a year to China.”
He insisted: “Tariffs are working out very well for us. People don’t understand that yet.”
Trump acted hours after Beijing said it would hike tariffs on $75 billion in U.S. imports, a move some economists fear could tip a fragile global economy into recession.
Administration officials, including U.S. Trade Representative Robert Lighthizer and adviser Peter Navarro, discussed potential retaliatory options. Treasury Secretary Steve Mnuchin, returning from vacation, joined by phone.
Earlier Friday, the president said he “hereby ordered” U.S. companies to seek alternatives to doing business in China. Trump does have the authority under 50 U.S. Code Chapter 35 - International Emergency Economic Powers.
If Trump goes ahead with all the tariffs he’s announced, they would cover just about everything China ships to the United States.
China, for its part, applied new tariffs of 5% and 10% on $75 billion of U.S. products in retaliation. Like Trump’s, the Chinese tariffs will be imposed in two batches — first on Sept. 1 and then on Dec. 15.
China will also go ahead with previously postponed import duties on U.S.-made autos and auto parts, the Finance Ministry announced.
Washington accuses China of using predatory tactics - including outright theft of U.S. trade secrets.
Twelve rounds of talks have failed to break the impasse, though more negotiations are expected next month. Chinese leaders have offered to alter details of their policies but are resisting any deal that would require them to give up their practices.
The two countries are also deadlocked over how to enforce any agreement.
Tariff increases on Sept. 1 apply to 1,700 items ranging from frozen sweet corn, dried beef and pork liver to marble, other building materials and bicycle tires, according to the Chinese Finance Ministry.
Penalties that take effect Dec. 15 cover 3,300 items including coffee, cinnamon, industrial chemicals and scissors, the ministry said.
The Chinese said tariffs of 25% and 5% would be imposed on U.S.-made autos and auto parts on Dec. 15.
Beijing had planned those tariff hikes last year but temporarily dropped them to keep the talks going.
BMW, Tesla, Ford and Mercedes-Benz are likely to be the hardest hit by the Chinese auto tariffs.
In 2018, BMW exported about 87,000 luxury SUVs to China from a plant near Spartanburg, S.C. It exports more vehicles to China than any other U.S. auto plant.
Together, Ford, BMW, Mercedes and others exported about 164,000 vehicles to China from the U.S. in 2018, according to the Center for Automotive Research, a think tank in Ann Arbor, Michigan. The exports are down from about 262,000 in 2017.
Tesla, which is building a plant in China, last year got about 12% of its revenue by exporting about 14,300 electric cars and SUVs from California to China, according to Barclays.
Most of Ford’s exports are from the Lincoln luxury brand, but most of the vehicles it sells in China are made in joint-venture factories.