President Donald Trump took his boldest step to level the economic playing field with China, ordering sweeping tariffs on Chinese goods in a move that could escalate already tense trade relations between the world’s two biggest economies.
The president instructed U.S. Trade Representative Robert Lighthizer to levy tariffs on at least $50 billion in Chinese imports. Trump signed an executive memo issuing the instructions on Thursday at the White House. Within 15 days, USTR will come up with a proposed list of products that will face higher tariffs.
“This has been long in the making,” Trump said, adding that the tariffs could affect as much as $60 billion in goods. “We have a tremendous intellectual property theft situation going on” with China affecting hundreds of billions of dollars in trade each year, he said.
As he signed the tariffs order, Trump told reporters, “This is the first of many.”
The U.S. will impose 25 percent duties on targeted Chinese products to compensate for the harm caused to the American economy from China’s policies, according to a fact sheet released by USTR. The proposed product list will include items in aerospace, information and communication technology and machinery. USTR will announce the proposed list in the next “several days,” according to the fact sheet.
The move prompted a sharp rebuke from China.
“We don’t want a trade war but we are not afraid of it,” said China’s ambassador to the U.S., Cui Tiankai. “If somebody tries to impose a trade war on us, we will certainly fight back and retaliate. If people want to play tough, we will play tough with them and see who will last longer.”
Policy makers across the world are warning of a brewing trade war that could undermine the broadest global recovery in years. U.S. stocks fell sharply early Thursday amid worries that the U.S. action could provoke a stern response from China, with the S&P 500 down 2.1 percent at 3:35 p.m. in New York. Meanwhile, business groups representing companies ranging from Walmart Inc. to Amazon.com Inc. are warning U.S. tariffs could raise prices for consumers and sideswipe stock prices.
Fed Warnings
Even central banks, which normally stay above the fray of trade spats, are weighing in. “A number of participants reported about their conversations with business leaders around the country and reported that trade policy has become a concern,” Federal Reserve Chairman Jerome Powell said this week, while cautioning that trade issues haven’t changed the Fed’s outlook. The Bank of England warned Thursday that increased protectionism could have a “significant negative impact” on global growth.