Escalating his trade fight with China, President Donald Trump has raised retaliatory tariffs and ordered American companies to consider alternatives to doing business there.
He also blamed his appointed head of the U.S. central bank, Federal Reserve Chairman Jerome Powell, for the state of the domestic economy and wondered who was a “bigger enemy” of the US Powell or Chinese President Xi Jinping.
Even by the turbulent standards of the Trump presidency, his actions Friday, all via Twitter, were notable.
They sent markets sharply lower and added to a sense of uncertainty during his visit to France for a meeting of global economic powers.
Trump’s move came after Beijing announced it had raised taxes on US products.
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 noted that Fed had limited tools to deal with damage from the trade dispute.
Trump said he would be raising planned tariffs on USD 300 billion in Chinese goods from 10 per cent to 15 per cent.
The Office of the US Trade Representative also said existing tariffs on another USD 250 billion in Chinese imports would go from 25 per cent to 30 per cent on October 1 after receiving feedback from the public.
Late Friday, 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 that “tariffs are working out very well for us. People don’t understand that yet.”
The Chinese government, in a statement posted on the Commerce Ministry’s website Saturday, railed against “this kind of unilateral, bullying trade protectionism” urged the Trump administration to “immediately stop its mistaken course of action, or else the US will have to bear all the consequences.”
The impact of higher tariffs could be sweeping for consumers.
Trump’s latest escalation will impose a burden on many American households. Even before he announced an increase, J.P. Morgan had estimated that Trump’s tariffs would cost the average household roughly USD 1,000 a year if he proceeded with his threats.
Trump appeared caught off-guard by China’s tariff increase, and was angry when he gathered with his trade team in the Oval Office before departing for France, according to two people familiar with the meeting who spoke to The Associated Press on condition of anonymity because they were not authorized to disclose closed-door conversations.
Earlier, the president said he “hereby ordered” US companies to seek alternatives to doing business in China.
The White House did not cite what authority the president could use to force private businesses to change their practices. Businesses large and small joined in a chorus of opposition to the intensifying hostilities.
China imposed new tariffs of 5 per cent and 10 per cent on USD 75 billion of US products in retaliation.
Like Trump’s, the Chinese tariffs will be imposed in two batches first on September 1 and then on December 15.
China will also go ahead with previously postponed import duties on US-made autos and auto parts, the Finance Ministry announced.
The 13-month-long feud between the US and China has been rattling financial markets, disrupting international trade and weakening prospects for worldwide economic growth.
Washington accuses China of using predatory tactics – including outright theft of US trade secrets – in an aggressive drive to turn itself into a world leader in cutting-edge technologies such as artificial intelligence and electric cars.
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 aspirations to become a technological powerhouse.
The two countries are also deadlocked over how to enforce any agreement.