Deepening its trade battle with the United States and sending financial markets spinning, China announced tariff hikes Monday on $60 billion of American goods in retaliation for President Donald Trump’s latest penalties on Chinese products.
Punitive charges of 5% to 25% on thousands of American products including batteries, spinach and coffee will take effect June 1, the Finance Ministry said. That extends Chinese duty increases to $110 billion of imports from the United States.
The announcement followed an increase of U.S. duties on $200 billion of Chinese imports to 25% from 10% in the increasingly bitter dispute. American officials have accused China of backtracking on commitments they say it made in earlier negotiations.
On Twitter, Trump warned Chinese President Xi Jinping his country “will be hurt very badly” if it doesn’t agree to a trade deal.
Trump tweeted China “had a great deal, almost completed, & you backed out!” The president insisted increases on Chinese goods don’t hurt American consumers, saying there is “no reason for the U.S. Consumer to pay the Tariffs.”
White House economic adviser Larry Kudlow acknowledged Sunday that U.S. consumers and businesses do pay the tariffs. “Both sides will pay,” he told Fox News.
China had vowed “necessary countermeasures” on Friday against Trump’s escalation.
Frazzled by the uncertainty, shares sank Monday across the globe. The Dow Jones Industrial Average lost 622.10 points or 2.4%, while the Standard & Poor’s 500 sank 2.5% in early trading.
China’s announcement Monday said tariff increases are going ahead based on a list of $60 billion of U.S. goods Beijing released in August. That list was issued in response to Trump’s threat to raise tariffs on $200 billion of Chinese goods to 25% from 10%. Beijing said then it wouldn’t take action until the U.S. increases took effect, which finally happened on Friday.
A 25% tariff applies to 2,493 items including industrial chemicals, electronic equipment, precision machinery and hundreds of food products, according to the Finance Ministry. A 20% penalty applies to 1,078 items, 10% to 974 items and 5% to 662 items.
Beijing is running out of U.S. imports for penalties due to the lopsided trade balance between the world’s two largest economies. Regulators have targeted American companies in China by slowing down customs clearance for shipments and processing of business licenses.
The new tariffs are likely to hurt exporters on both sides, as well as European and Asian companies that trade between the United States and China or supply components and raw materials to their manufacturers.
China’s state media tried to reassure businesses and consumers the ruling Communist Party has the resources and policy tools to respond.
“There is nothing to be afraid of,” said the party newspaper People’s Daily. “The U.S.-instigated trade war against China is just a hurdle in China’s development process. It is no big deal.”