WASHINGTON--U.S. President Donald Trump vowed to impose a 10% tariff on $300 billion of Chinese imports from Sept. 1, sharply raising the stakes in a bruising trade war with China and jolting global financial markets.
The announcement on Thursday extends Trump's trade tariffs to nearly all China's imports into the United States and marks an abrupt end to a temporary truce in a trade row that has hurt world growth and disrupted global supply chains. Trump also threatened to raise tariffs further if China's President Xi Jinping fails to move more quickly to strike a trade deal.
"I think President Xi ... wants to make a deal, but frankly, he's not going fast enough," Trump said.
Trump made the announcement in a series of Twitter posts after his top trade negotiators briefed him on a lack of progress in U.S.-China talks in Shanghai this week. Trump later said if trade negotiations fail to progress he could raise tariffs further - even beyond the 25 percent levy he has already imposed on $250 billion of imports from China.
The news hit U.S. financial markets hard. On Friday, Asian stocks took a battering and the safe-haven yen jumped as investors rushed for cover.
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%. Asked about the impact on financial markets, Trump told reporters: "I'm not concerned about that at all."
Moody's said the new tariffs would weigh on the global economy at a time when growth is already slowing in the 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.
Raising tariffs would lower the prospects of a deal rather than expedite it, China's Global Times newspaper said. Beijing would focus more on efforts to survive a prolonged trade war, Hu Xijin, editor-in-chief of the Communist Party-backed newspaper, said on Twitter. "New tariffs will by no means bring closer a deal that the U.S. wants; it will only make it further away," Hu said.
Possible retaliatory measures by China could include tariffs, a ban on the export of rare earths and penalties against U.S. companies in China. So far, Beijing has refrained from slapping tariffs on U.S. crude oil and big aircraft, after cumulatively imposing additional retaliatory tariffs of up to 25% on about $110 billion of U.S. goods since the trade war broke out last year.
China is also drafting a list of "unreliable entities" - foreign firms that have harmed Chinese interests. U.S. delivery giant FedEx is under investigation by China. "China will deliver each retaliation methodically, and deliberately, one by one," ING economist Iris Pang wrote in a note.
“We believe China's strategy in this trade war escalation will be to slow down the pace of negotiation and tit-for-tat retaliation. This could lengthen the process of retaliation until the upcoming U.S. presidential election," Pang said.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin briefed Trump on their first face-to-face meeting with Chinese officials since Trump met Xi at the G20 summit at the end of June and agreed to a ceasefire in the trade war. "When my people came home, they said, 'We're talking. We have another meeting in early September.' I said, 'That's fine, but until such time as there's a deal, we'll be taxing them," Trump told reporters.
A source familiar with the matter said Trump grew frustrated and composed the tweets shortly after Lighthizer and Mnuchin told him China made no significant movement on its position. Previous negotiations collapsed in May, when U.S. officials accused China of backing away from earlier commitments.
American business groups in China expressed disquiet over the latest round of U.S. tariffs. The U.S.-China Business Council said on Friday it was concerned the action "will drive the Chinese from the negotiating table, reducing hope raised by a second round of talks that ended this week in Shanghai.”
"We are particularly concerned about increased regulatory scrutiny, delays in licenses and approvals, and discrimination against U.S. companies in government procurement tenders," said the U.S.-China Business Council's President Craig Allen in an e-mail.