Trump raises tariffs on China and threatens Fed chairman
WASHINGTON – President Donald Trump ratcheted up tariffs on $550 billion of Chinese imports, told American companies doing business in China to find alternatives, and denounced the head of the Federal Reserve as an “enemy,” in a dizzying array of angry tweets Friday that sent markets reeling.
By day’s end, the trade war with China, which was already buffeting the U.S. and global economies, had significantly escalated, and many analysts had abandoned hopes of a near-term deal. Trump appeared to have worsened the economic turbulence that his administration says it is trying to reduce.
The day began with China announcing tariffs of 5% to 10% on $75 billion of U.S. products, a step designed to retaliate against a previous round of tariffs that Trump had announced earlier this month.
Trump called the retaliation “politically motivated” and a mistake. By sunset, he struck back with an additional 5% hike on previous and upcoming tariffs on all Chinese imports – equivalent to a $27.5 billion annual tax increase on consumers of Chinese goods.
“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!” Trump tweeted in announcing the new tariffs.
Earlier in the day, Trump lit into Jerome H. Powell – whom he chose as chairman of the U.S. central bank in 2017 – after Powell stopped short of committing to make more interest rate cuts, which Trump has demanded as a way to stimulate a slowing economy.
“My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” Trump said in a remarkable message on Twitter, comparing Powell to Chinese President Xi Jinping.
Trump and his economic team have been increasingly concerned about the economy, which is weakening and could foil Trump’s reelection bid if it were to fall into recession. Trump has repeatedly sought to blame the Fed. He has also said he is considering tax cuts and other ways to bolster growth, but his own actions, including the increasingly costly trade war with China, have been a principal cause of economic turbulence, according to economic analysts from both parties.
Trump also tweeted that he had “ordered” American companies “to immediately start looking for an alternative to China.”
The statement goes far beyond a president’s authority, although Trump could potentially take steps to retaliate against some businesses that continue to do business in China. The “order” indicated the depth of Trump’s agitation over his failure to prevail in a trade war with China that he had once predicted would be “easy.”
“We don’t need China and, frankly, would be far better off without them,” Trump tweeted.
The belligerent remarks combined with China’s announcement of counter-tariffs – a show of resolve on Beijing’s part – marked a notable worsening of the trade dispute, which has gone on for more than a year.
Analysts said that although Trump has often pulled back from impulsive threats in the past, the day’s events had dashed remaining hopes for a near-term resolution to the trade conflict.
“These further tariffs only indicate there is not going to be a solution to the tariff and trade issues for the remainder of the Trump administration,” said David Bachman, an expert on U.s.-china relations at the University of Washington. “The uncertainty whether there will be a deal or not has been answered at least for the next two years,” he said.
U.S. and Chinese negotiators are scheduled to meet next month, but Riley Walters, a Heritage Foundation policy analyst, said Trump’s outburst “could blow that out of the water.”