TARIFFS HIT HOME
Wall St. tumbles as China targets 5,000 U.S. items in payback for Trump hikes
The U.S. trade war with China just got very real.
Beijing’s tit-for-tat tariffs Monday were slapped on $60 billion in U.S. goods ranging from gin to gym shoes, dashing hope for a quick end to a battle between the world’s two largest economies.
Saying it would “never surrender” to outside pressure, China published the goods targeted — a stunning 5,000-item long list with tariffs of 5% to 25% covering a range of agricultural products, chemicals, metals and fabrics.
Wall Street shuddered. The Dow Jones average fell 617 points, its worst session since Jan. 3. Drops were also recorded by the S&P 500 and the Nasdaq Composite.
The new Chinese tariffs take effect June 1. And since higher tariffs that President Trump announced last week on Chinese goods also have a delayed effect, there could be a way out — though neither side seemed ready to budge.
“We have said many times that adding tariffs won’t resolve any problem. China will never surrender to external pressure. We have the confidence and the ability to protect our lawful and legitimate rights,” Chinese Foreign Ministry spokesman Geng Shuang said at a briefing.
A few hours before China announced its action, Trump warned in a tweet that “China should not retaliate — will only get worse!”
“I say openly to President Xi (Jinping) & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!” Trump scolded in another tweet.
China’s latest move wasn’t unexpected. Trade talks in Washington broke off Friday, and the Trump administration promptly announced it would hike taxes on $200 billion of imported Chinese goods to 25% from 10%.
A mere couple of weeks ago, hope was in the air after rounds of talks between the economic superpowers. The hardening of positions in recent days ended that optimism.
Now, the blame game begins.
Chinese state media faulted Washington for the crisis and argued that China’s economy and political system were strong enough to outlast the U.S. in a battle of wills.
For his part, Trump has so far slapped 25% tariffs on a total of $250 billion of Chinese goods, taking the first action in June after his administration concluded China has for many years been engaged in intellectual property theft and policies that coerce U.S. firms to hand over technologies in order to gain access to Chinese markets.
The next threatened step would be to impose 25% tariffs on all of the remaining Chinese merchandise that enters the U.S. — roughly another $300 billion worth of goods. That would include many consumer products, including such high-profile imports as Apple iPhones, which are not subject to import taxes.
Since the trade fight began, China has imposed new or higher duties on $110 billion of American imports. Last year, China imported about $156 billion of merchandise from the United States, according to China’s customs data, though U.S. data put the figure at about $120 billion.
The new Chinese tariffs would hit 5,140 Americanmade items with duties from 5% to 25%, with nearly half of them at 25%. The list includes nuts, legumes, honey, meat and wine, gin, vodka and tequila as well as chemicals, cosmetics, tires, timber, fabrics, sports shoes, gems, steel and other metals.
The Ministry of Finance statement said the tariffs were “a response to unilateralism and trade protectionism.”
“China hopes that the United States will return to the right track of bilateral trade negotiations, work together with China and meet China halfway to reach a mutually beneficial, winwin agreement on the basis of mutual respect and equality,” the ministry said.