WASHINGTON, (Reuters) – President Donald Trump said yesterday he had instructed U.S. trade officials to consider $100 billion in additional tariffs against China, upping the ante in an already high-stakes trade confrontation between the world’s two biggest economies.
The further tariffs were being considered “in light of China’s unfair retaliation” against earlier U.S. trade actions, which included a proposed $50 billion of tariffs on Chinese goods, Trump said in a White House statement.
Financial markets, unsettled for days by the trade fight and Trump’s management of it, whipsawed again on the new threat. After a bullish regular trading day, U.S. equity futures sold off sharply in after-market-hours trading.
S&P 500 e-mini futures traded down 1.3 percent, with similar moves in Dow and Nasdaq futures. In the currency markets, the U.S. dollar fell against the Japanese yen.
“The hastily crafted policy like we have seen from Trump over the last two, three days and now tonight … is dangerous,” said Doug Kass, who runs hedge fund Seabreeze Partners Management Inc. “Our president is going to make market volatility and economic uncertainty great again.”
In his statement, Trump said the U.S. Trade Representative had determined that China “has repeatedly engaged in practices to unfairly obtain America’s intellectual property.”
Earlier this week, the Trump administration proposed 25 percent tariffs on 1,300 Chinese industrial and other products. China shot back with a list of similar proposed duties on American imports, including soybeans, planes, cars, beef and chemicals.
“Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers,” the Republican president said.
The tit-for-tat tariff announcements have stirred fears that the two countries will spiral into a trade war that will crush global growth. Republican lawmakers from Western and Midwestern states have voiced worries about a big hit to U.S. farming exporters.
On the new tariff threat, Republican Senator Ben Sasse said in a statement: “Hopefully the president is just blowing off steam again but, if he’s even half-serious, this is nuts.
“China is guilty of many things, but the president has no actual plan to win right now. He’s threatening to light American agriculture on fire. Let’s absolutely take on Chinese bad behavior, but with a plan that punishes them instead of us. This is the dumbest possible way to do this,” said the lawmaker from the farm-belt state of Nebraska.
White House officials have suggested throughout the week that talks with the Chinese could help resolve trade issues between the two countries. China ran a $375 billion goods trade surplus with the United States in 2017. Trump has demanded that China cut the trade gap by $100 billion.
A senior U.S. official who requested anonymity told Reuters no formal negotiating sessions had yet been set, but that the United States was willing to negotiate with China.
The U.S. tariffs are aimed at forcing changes to Chinese government policies designed to transfer U.S. intellectual property to Chinese companies.
The USTR’s “Section 301” investigation authorizing the tariffs alleges China has systematically sought to misappropriate U.S. intellectual property through joint venture requirements that often cannot be negotiated without technology transfers, something China denies.
A USTR spokeswoman did not immediately respond to a request for more information about which products would be targeted or the selection method and timing of the additional tariffs.
A further $100 billion in tariffs on Chinese goods would likely expand the scope of Trump’s attack to more consumer goods. The first round of $50 billion in tariffs mostly targeted industrial goods and electronic components.
The biggest category of U.S. imports from China last year was communications equipment, such as cellphones, and computer equipment. Both were spared from the initial tariffs list.
Dean Garfield, chief executive of the Information Technology Industry Council, a tech industry lobbying group in Washington, said in a statement: “The announcement that the administration may issue $100 billion in additional tariffs on Chinese products is irresponsible and destabilizing.
“We need the U.S and China to come to the table and identify solutions to these serious problems. We call on both sides to halt unproductive and escalatory rhetoric, recognizing that these words and actions have global consequences.”