President Donald Trump on Thursday directed U.S. trade officials to identify tariffs on $100 billion more Chinese imports, upping the ante in an already high-stakes trade confrontation between the world’s two largest economies.
The further tariffs were being considered “in light of China’s unfair retaliation” against earlier U.S. trade actions, which included a proposed $50 billion of tariffs on Chinese goods, Trump said in a White House statement.
“This is what a trade war looks like, and what we have warned against from the start,” said National Retail Federation President and CEO Matthew Shay.
“We are on a dangerous downward spiral and American families will be on the losing end,” Shay added in a statement, urging Trump “to stop playing a game of chicken with the U.S. economy.”
Financial markets, roiled for days by the trade fight and Trump’s management of it, whipsawed again on the new threat. After a bullish regular trading day, U.S. equity futures sold off sharply in after-market-hours trading.
U.S. stock futures ESc1 slid 1 percent and the dollar dipped against other major currencies .DXY, while Asian shares flitted in and out of positive territory. Chinese markets were closed for a holiday.
Doug Kass, who runs hedge fund Seabreeze Partners Management Inc, added: “Our president is going to make market volatility and economic uncertainty great again.”
In his statement, Trump said the U.S. Trade Representative had determined that China “has repeatedly engaged in practices to unfairly obtain America’s intellectual property.”
The tit-for-tat escalation of tariff announcements, which have stirred fears that trade unfolded surprisingly rapidly . They have stirred fears that the two countries will spiral into a trade war that will crush global growth.
Chinese state media slammed Trump’s threat of more trade action against China as “ridiculous”.
“This latest intimidation reflects the deep arrogance of some American elites in their attitude towards China,” the state-run Global Times said in an editorial.
On Tuesday, USTR proposed 25 percent tariffs on more than 1,300 Chinese industrial and other products from flat-panel televisions to electronic components. China shot back 11 hours later with a list of proposed duties on $50 billion of American imports, including soybeans, aircraft, cars, beef and chemicals.
“Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers,” the Republican president said.
Republican lawmakers from Western and Midwestern states have voiced worries about a big hit to U.S. farming exporters.
‘THIS IS NUTS’
On the new tariff threat, Republican Senator Ben Sasse said in a statement: “Hopefully the president is just blowing off steam again but, if he’s even half-serious, this is nuts.
“Let’s absolutely take on Chinese bad behavior, but with a plan that punishes them instead of us. This is the dumbest possible way to do this,” said the lawmaker from the farm-belt state of Nebraska.
The U.S. Department of Agriculture is looking for ways to assist farmers affected by China’s tariffs, USDA undersecretary Bill Northey told Reuters, but did not offer specifics.
White House officials have suggested throughout the week that talks with the Chinese could help resolve trade issues between the two countries. China ran a $375 billion goods trade surplus with the United States in 2017. Trump has demanded that China cut the trade gap by $100 billion.
A senior U.S. official who requested anonymity told Reuters no formal negotiating sessions had yet been set, but that the United States was willing to negotiate with China.
The U.S. tariffs are aimed at forcing changes to Chinese government policies designed to transfer U.S. intellectual property to Chinese companies and allow them to seize leadership in key high-technology industries of the future.
The USTR’s “Section 301” investigation authorizing the tariffs alleges China has systematically sought to misappropriate U.S. intellectual property through joint venture requirements that often cannot be negotiated without technology transfers, something China denies.
TARIFF TARGETS NOT YET CHOSEN
A USTR spokeswoman said that the $100 billion second-round of potential tariffs had not been determined yet and would be selected by USTR career staff – not political appointees – along with economists and trade experts.
The new list will be proposed in the same manner as the first round and will go through a similar public comment period before any of them are activated, the spokeswoman said.
A further $100 billion in tariffs on Chinese goods would likely expand the scope of Trump’s attack to more consumer goods. The first round of $50 billion in tariffs mostly targeted industrial goods and electronic components.
The two biggest categories of U.S. imports from China last year were communications and computer equipment, totaling $137 billion according to U.S. Census data. Cellphones and computers, key portions of these categories, were spared from the initial tariffs list.
Apparel and footwear, both labor-intensive industries in China, made up a combined $39 billion in U.S. imports.
Dean Garfield, chief executive of the Information Technology Industry Council, a tech industry lobbying group in Washington, said the additional tariffs were “irresponsible and destabilizing.”
“We need the U.S and China to come to the table and identify solutions to these serious problems,” he added.