President Donald Trump said he might raise U.S. tariffs on Chinese goods beyond 25% if trade negotiations with Beijing remain stalled.
Trump told reporters that the new 10% tariff he announced Thursday for $300 billion in Chinese imports beginning Sept. 1 would be imposed for a short term and could go up or down after that. He didn’t elaborate.
Chinese President Xi Jinping isn’t moving fast enough to resolve the trade war with the U.S., Trump told reporters as he departed the White House for a campaign rally in Cincinnati. “Frankly he is not going fast enough,” Trump said.
Trump also said he’s “not concerned at all” that stock markets dropped after his announcement of the new tariffs. “I expected that a little bit.”
The Dow closed down 285 points, reversing gains after Trump tweeted that he would impose 10% tariffs on an additional $300 billion of Chinese imports on Sept. 1.
Trump said that the United States would be "taxing" China until a deal is secured.
Trump, who often says the tariffs are a tax paid by China, told reporters the proposed tariffs could be increased in stages and said they could rise above 25%.
Trump's announcement came after U.S. and Chinese negotiators wrapped a two-day meeting in Shanghai on Wednesday without significant signs of progress in resolving a trade war between the world's two largest economies.
Oil prices plummeted 7%, with Brent crude registering the biggest daily percentage drop since February 2016. The benchmark S&P 500, which had been in solidly positive territory on Thursday afternoon, closed down 0.9%. Benchmark U.S. Treasury yields also fell.
Retail associations predicted a spike in consumer prices. Target Corp tumbled 4.2%, Macy’s Inc fell 6% and Nordstrom Inc was down 6.2%.
Moody’s predicted the new tariffs would weigh on the global economy at a time when growth is already slowing in United States, China and the euro zone.
The tariffs may also force the Federal Reserve to again cut interest rates to protect the U.S. economy from trade-policy risks, experts said.
He said the tariff rate could be increased in stages. “The 10 percent is for a short-term period and then I can always do much more or I can do less, depending on what happens with respect to a deal.”
Trump’s decision came after Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin briefed him on their talks in Shanghai, a White House official said. It was the first face-to-face meeting with Chinese officials since Trump and Xi agreed to a trade ceasefire at a G20 summit in June.
The Shanghai talks ended on Wednesday with little sign of progress, although both countries described the negotiations as constructive and scheduled another round of meetings in Washington in September.
Trump had been pressing Xi to crack down on a flood of fentanyl and fentanyl-related substances from China, which U.S. officials say is the main source of a drug blamed for most of more than 28,000 synthetic opioid-related overdose deaths in the United States in 2017.
Xi had promised Trump at a summit in Argentina in December that Beijing would take action. China had pledged that from May 1 it would expand the list of narcotics subject to state control to include the more than 1,400 known fentanyl analogues, which have a slightly different chemical makeup but are addictive and potentially deadly, as well as any new ones developed in the future.
Talks between the United States and China collapsed in May, after U.S. officials accused China of reneging on earlier commitments. The trade dispute escalated as Washington sharply hiked tariffs on $200 billion worth of Chinese goods and Beijing retaliated.
Trump subsequently threatened to impose 25% sanctions on the remaining $300 billion in Chinese imports, prompting warnings from Walmart and other major U.S. retailers of a sharp spike in consumer prices. Thursday’s tweets indicated those goods would face a lower tariff rate than initially threatened, at least at first.
While the United States bemoans the lack of larger Chinese agricultural purchases, Beijing has been pressing Washington to relax restrictions on sales to Chinese telecommunications giant Huawei as it had promised.
The U.S. Department of Agriculture on Thursday confirmed private sales to China of 68,000 tonnes of soybeans in the week ended July 25.
The sale was the first to a private buyer since Beijing offered to exempt five crushers from the 25% import tariffs imposed more than a year ago. Soybean futures opened lower on Thursday as traders shrugged off the small amount, and losses accelerated after Trump’s tweets.
The new tariffs will jack up prices for consumers at the start of the back-to-school buying season, four large retail trade associations warned on Thursday.
“President Trump is, in effect, using American families as a hostage in his trade war negotiations,” said Matt Priest, president of the Footwear Distributors and Retailers of America.
Stephen Lamar, executive vice president of the American Apparel & Footwear Association, said his group’s members were members were shocked that Trump had not allowed the resumed U.S.-China trade talks to proceed further before acting.
The measure will hit U.S. consumers far harder than Chinese manufacturers, who produce 42% of apparel and 69% of footwear purchased in the United States, Lamar said.
Material from Bloomberg and Reuters has been used in this report.
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