U.S.-China Trade Tensions Rise with Dueling Tariff Announcements
On Friday, both the U.S. and China ratcheted up plans for tariffs on each others' goods, sending stocks and oil futures down sharply.
On August 1, U.S. President Donald Trump announced that he would impose a tariff of 10 percent on virtually all categories of Chinese goods that have not yet been subjected to levies. On Friday morning, in a retaliatory measure, Beijing announced that it would reintroduce tariffs on American auto products and impose new tariffs on about $75 billion in U.S.-made goods. In a Twitter response, Trump said that he would increase current and planned tariffs on all Chinese goods by an additional five percent.
"The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must stop. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies home and making your products in the USA," he wrote. "Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the [U.S. Postal Service], to search for and refuse all deliveries of Fentanyl from China (or anywhere else!)." (Fentanyl, a powerful synthetic opioid, is a common and deadly additive to street drugs, and it is primarily sourced from China.)
Market reaction was swift: by the close of trading Friday, the Dow fell by 2.4 percent, the Nasdaq by 3.0 percent, the WTI crude index by 2.5 percent and Brent crude by 1.9 percent.
Business associations that oppose American tariffs and reciprocal Chinese trade measures - like the Retail Federation of America and the U.S. Chamber of Commerce - quickly voiced their objections to the new tariff announcements.
"We do not want to see a further deterioration of US-China relations," said U.S. Chamber EVP and head of international affairs Myron Brilliant. "We urge the administration and the government of China to return to the negotiating table to complete an agreement that addresses concerns over technology transfer practices, intellectual property enforcement, market access, and the globally damaging impact of Chinese domestic subsidies."
The American Farm Bureau, the biggest association of American farmers and ranchers, also called for calm and a return to bilateral talks. “Continuing negotiations is the best way to restore certainty to export markets farmers and ranchers depend on. We need substantive trade agreements that ensure American agriculture can provide an abundant and safe food supply for the world’s growing population," said American Farm Bureau Federation President Zippy Duvall.
Americans for Free Trade, a group of 150 American business associations like the American Petroleum Institute, the American Chemistry Council and the National Retail Federation, called on Congress to intervene in the trade dispute. "The administration is betting the health of our entire economy on a tariff strategy that is a proven loser. These added tariffs will ratchet up consumer prices, stall business investment, escalate uncertainty and cost American jobs. Congress can’t sit on the sidelines any longer while jobs, retirement savings and local farms are put at risk by a trade war that gets more dangerous by the day. Enough is enough," the group said via its public awareness campaign, Tariffs Hurt the Heartland.