Trade war escalates as Trump increases tariffs on Chinese imports
23 August 2019, 13:30 | Updated: 24 August 2019, 01:08
US President Donald Trump has announced an additional 5% tariff on Chinese imports.
The move comes in response to what Mr Trump called a politically motivated decision by China to place tariffs on $75bn (£61bn) of US goods.
He wrote on Twitter: "Sadly, past administrations have allowed China to get so far ahead of fair and balanced trade that it has become a great burden to the American taxpayer.
"As president, I can no longer allow this to happen!"
Mr Trump announced:
- The US will raise tariffs on $250bn (£203bn) of Chinese imports to 30% from the current 25% from October
- An increase in the planned tariffs on the remaining $300bn (£244bn) worth of Chinese goods from the previously announced 10% to 15% from September (although about half of these have been delayed until December)
Earlier, he had said he was ordering US companies to look at ways to close their operations in China and make more of their products in the United States instead.
However, the president cannot compel American companies to abandon China, and he gave no detail on how he might proceed with any such order.
Mr Trump tweeted: "Our country has lost, stupidly, trillions of dollars with China over many years.
"They have stolen our intellectual property at a rate of hundreds of billions of dollars a year and they want to continue.
"I won't let that happen! We don't need China and, frankly, would be far better off without them.
"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."
Those words came after Beijing announced tariffs on $75bn (£61bn) of US goods as a retaliatory response to the White House's earlier plans to raise tariffs on an additional $300bn (£245bn) of Chinese imports.
The world's second-largest economy will raise tariffs by 5% to 10% on American goods in two batches starting from 1 September and 15 December, mimicking US moves.
China's commerce ministry said the country will reimpose tariffs on US auto parts - and for the first time will begin to target crude oil exported from the US.
It said in a statement: "China's decision to implement additional tariffs was forced by the US's unilateralism and protectionism."
The rising tensions unnerved investors, with the Dow Jones Industrial Average dropping 623 points on Friday and Brent crude oil falling by $1 to $58.30 (£47.65).
Michael Tran, director of energy strategy at RBC Capital Markets in New York, said: "The tit-for-tat trade war now has the oil market officially caught in the crossfire, this time with China striking the heart of Trump's traditional base of support of US oil producers.
"With China being the world's foremost crude import growth region, US producers need China, not the other way around.
"The US will have to find alternative buyers for their crude, which will be a challenge given the weakening global demand backdrop."
Meanwhile, Federal Reserve chairman Jerome Powell said Mr Trump's trade wars have complicated the central bank's ability to set interest rate policies but offered no clear signal about further interest rate cuts.
Mr Powell pointed to increasing evidence of a global economic slowdown and suggested that uncertainty from the American leader's trade wars had contributed to it.
Chris Beauchamp, chief market analyst at IG, said: "It was all going swimmingly, until Trump decided to respond with a series of dramatic tweets regarding China.
"Even a rate cut in September will likely be insufficient to appease the White House, meaning that investors should expect a volatile autumn."
Earlier, Mr Trump in an apparent reference to the new tariffs called on the Federal Reserve to acknowledge the impact of the tariffs while making its decisions on interest rate levels.
Agathe Demarais, global forecasting director at The Economist Intelligence Unit, called Beijing's move a "mild" and "proportionate" response.
She said: "The recent rise in nationalist, patriotic behaviour in China means that it would have been impossible for the Chinese government not to react to the latest US tariffs.
"The US-China trade war will continue to weigh on investors' sentiment in the coming months, putting a serious drag on global growth."
(c) Sky News 2019: Trade war escalates as Trump increases tariffs on Chinese imports