By Jacob Pramuk, CNBC–
- China will raise tariffs on $60 billion in U.S. goods in retaliation for the Trump administration’s latest decision to increase duties on $200 billion worth of Chinese products.
- U.S. stock indexes fall about 2% as the trade war between the world’s two largest economies escalates.
China will raise tariffs on $60 billion in U.S. goods in retaliation for the U.S. decision to hike duties on Chinese goods, the Chinese Finance Ministry said Monday.
Beijing will increase tariffs on more than 5,000 products to as high as 25%. Duties on some other goods will increase to 20%. Those rates will rise from either 10% or 5% previously.
The latest shot in the trade war rattled investors. Major U.S. stock indexes dove more than 2% Monday amid the escalation.
The duties in large part target U.S. farmers, who largely supported Trump in 2016 but suffered from previous shots in the Trump administration’s trade war with China. The thousands of products include peanuts, sugar, wheat, chicken and turkey.
Neither the White House nor the Treasury Department immediately responded to CNBC’s requests to comment on the tariff increase.
In increasing duties on Chinese goods on Friday, the White House said Beijing backed out of major parts of a developing trade agreement. While Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer met with Chinese negotiators last week in talks Mnuchin called “constructive,” the sides could not strike a deal.
Trump, who wants to address grievances such as intellectual property theft, forced technology transfers and trade deficits, pushed China to make a deal ahead of its retaliation on Monday morning. In a string of tweets, the president argued the tariffs are “very bad for China.” He said “China should not retaliate” as it “will only get worse!”
“You had a great deal, almost completed, & you backed out!” he wrote of China and its President Xi Jinping.
I say openly to President Xi & 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!
The president has repeatedly claimed China bears the brunt of the costs from the tariffs. But the burden falls largely on U.S. businesses and consumers.
Pressed Sunday during a Fox News interview about Americans paying the tariffs, Trump’s top economic advisor Larry Kudlow responded, “Fair enough. In fact, both sides will pay.”
Despite this, Trump claimed in a tweet Monday that “there is no reason for the U.S. Consumer to pay the Tariffs.” He also said the tariffs “can be completely avoided if you by (sic) from a non-Tariffed Country, or you buy the product inside the USA (the best idea).”
The U.S. hopes to revive discussions as it tries to reach a deal. On Sunday, Kudlow said there is a “strong possibility” Trump will meet with Xi during the G-20 summit in Japan next month.
— CNBC’s Kevin Breuninger and Tucker Higgins contributed to this report