China to impose new tariffs on U.S.
The trade war between the U.S. and China escalated further Friday as China announced a new set of tariffs on American products in retaliation for U.S. duties on Chinese imports.
The China State Council announced it would impose tariffs ranging from 5% to 10% on an additional $75 billion in U.S. goods, according to state media outlet Global Times.
The new tariffs are poised to go into effect in stages, with the first round beginning Sept. 1 and the second Dec. 15. China’s Commerce Ministry said 5,078 products would be affected, including soybeans, crude oil, small aircraft, whiskey and seafood.
This development comes after President Donald Trump earlier this month announced a new round of 10% tariffs on $300 billion in Chinese imports, also on those dates, largely targeting consumer products such as cellphones, laptops, clothing, footwear and toys.
Hours after the Chinese announcement, Trump promised on Twitter that he would “be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States.”
The Dow Jones industrial average fell 500 points by midday Friday after Trump tweeted that he has ordered U.S. companies to find an alternative to China to supply their goods, signaling a further escalation in the trade war.
The two sides have so far failed to reach an agreement on a comprehensive trade pact.
“The tariffs themselves aren’t a big economic deal. They’re not going to sink our economic ship, but it does highlight that this war is ongoing and steadily escalating,” said Mark Zandi, chief economist at Moody’s Analytics. “And if this shot isn’t the one that sinks the ship, if this continues, a shot down the road could be the one.”
Tariffs on U.S. goods exported to China could make it more expensive for Chinese consumers to purchase American items and hurt sales for the American companies.
Trump’s latest China tariffs: How they affect the economy
Conversely, tariffs on Chinese products exported to the U.S. could increase prices for American consumers and hurt sales for the Chinese companies.
“China has ammunition to fight back. The US side will feel the pain,” Global Times editor-in-chief Hu Xijin said Friday on Twitter.
Trump said on Twitter that “our great American companies are hereby ordered to immediately start looking for an alternative to China.”
“Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen!” he tweeted.
The most immediate effect on the economy relates “the uncertainty generated by this move,” Zandi said.
“Business people are tearing their hair out because they can’t figure out which products have tariffs, how big are the tariffs, which countries will the tariffs be on, how long will they be in place,” he said.
Brian Rose, UBS Global Wealth Management senior Americas economist, speculated that Trump could respond by hiking his latest round of tariffs on Chinese products from 10% to 25%.
“In our view, 25% tariffs would cause considerable economic damage and greatly increase the probability of a U.S. recession in 2020,” Rose wrote in response to Friday’s developments.
Contributing: Paul Davidson
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.