Trump targets China with tariffs on goods
U.S. 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.
He instructed U.S. Trade Representative Robert Lighthizer to levy tariffs on at least US$50 billion in Chinese imports. Trump signed an executive memo issuing the instructions 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 US$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 threat of an escalating trade war with China that could disrupt global growth pushed U.S. stocks to their biggest decline in six weeks.
The benchmark S&P 500 Index slumped the most since early February and the Dow Jones Industrial Average lost more than 700 points after Trump ordered the tariffs on Chinese goods. The 10-year Treasury yield slid toward 2.8 per cent and gold advanced with the yen as investors sought safe havens. The U.S. dollar rebounded.
“The market doesn’t like trade wars, the market doesn’t like that the Fed is adamant about raising rates,” said Matt Schreiber, president and chief investment strategist at WBI Investments. “Yes the economy has been pretty strong, the labour market has less slack, but there’s nothing to really get fired up about ...”
The U.S. will impose 25-per-cent duties on targeted Chinese goods to compensate for the harm caused to the U.S. economy from China’s policies, according to a USTR fact sheet. The proposed product list will include items in aerospace, information and communication technology and machinery.
New investment restrictions were also proposed on Chinese companies within 60 days to safeguard technologies the U.S. views as strategic, said senior White House economic adviser Everett Eissenstat.
Business groups representing companies are warning U.S. tariffs could raise prices for consumers and side-swipe stock prices.