Hours after China announced new tariffs on $75 billion in American goods including auto parts and farm products, the US President Donald Trump on Friday decided to raise existing tariffs on Chinese goods to 30% from October 1, reports from Beijing and Washington say.
Trump also ‘ordered’ US companies to immediately look for alternative to China in doing business.
Trump’s string of angry and threatening tweets over duties announced by China led to a mass sell-off on the US stock market with Dow Jones industrial average falling 623 points and the Nasdaq composite and S&P 500 ending down 3% and 2.6% respectively.
American companies were surprised as the president does not have the powers to issue them ‘orders’ to leave China.
Trump’s tweets came amid signs of a global slowdown as world leaders arrived in France for the Group of Seven summit.
Trump said a 10% tariff on $300 billion in Chinese goods set to come into effect from September 1 would now be raised to 15 percent.
A 25% tariff on an additional $250 billion in Chinese goods set to be enforced from October 1 will now be increased to 30 percent.
Trump called the retaliatory duties imposed by China earlier in the day as politically motivated.
China’s latest tariffs are going to particularly hit US farmers as the trade war between the world’s two economic giants drags on amid fears of global recession and reports saying it may hit the US in 2021.
Currently, the US economy has some bright spots such as steady growth, low unemployment, rising wages and consumer spending. As trade war rages, these bright spots may gradually vanish.
The anger and frustration of Trump, who puts America first, was evident when he called Chinese President Xi Jinping an “enemy”.
He also turned his ire on Jerome Powell, chairman of the Federal Reserve, who keeps the interest rates high.
He mocked Powell by saying the US dollar is strong but its Fed is weak.
His comments came after Powell told a recent Fed summit that settling international trade disputes is the job of the Congress and the administration, not the central bank.
Economists think the US-China trade war is playing a role in slowing the global economy.
Trump has dismissed recession fears saying media speculation is fuelling it.
Beijing wants Washington to compromise on a number of trade issues and meet it halfway. It hopes the two sides can work out a solution based on mutual respect and equal treatment.