US President Donald Trump has warned he is ready to slap tariffs on virtually all Chinese imports into the United States, threatening duties on another $US267 billion ($375 billion) in Chinese goods on top of $US200 billion in imports now primed for levies in coming days.
His latest salvo rocked Wall Street, with top US executives having made a last-minute push to convince the president to not impose fresh tariffs. Major currencies including the Aussie slumped against the US dollar.
The moves would sharply escalate Trump’s trade war with Beijing over his demands for major changes in economic, trade and technology policy. China has threatened retaliation, which could include action against US companies operating there.
Hours after a public comment period closed on his $US200 billion China tariff list, Trump told reporters aboard Air Force One on Friday that he was “being strong on China because I have to be.”
“The $US200 billion we are talking about could take place very soon depending on what happens with them. To a certain extent its going to be up to China,” he said. “And I hate to say this, but behind that is another $US267 billion ready to go on short notice if I want. That totally changes the equation.”
Stock prices slipped after his comments, which roiled technology and multinational shares. The US dollar climbed and US Treasuries fell as wage gains bolstered the prospects for further rate hikes.
The Nasdaq 100 Index capped its worst week since March as Apple slumped on its warning that the Trump administration’s musing over levying virtually everything imported from China would hit a broad range of its products. The S&P 500’s weekly drop was the most since June and Boeing led declines in the Dow Jones Industrial Average.
The US dollar rallied versus major peers and the offshore Chinese yuan fell the most in a week. The 10-year Treasury yield pushed above 2.94 per cent.
Trump’s latest comments also weighed on the Aussie dollar, which fell 1.25 per cent to US71.10¢.
‘Full blown trade war’
“The risks are real and there’s increasing evidence that we’re closer to more of a full blown trade war,” said Bong-Seok Choi, director of research at San Francisco-based Wetherby Asset Management. “The trade wars only serve as a catalyst for the turning of the cycle. Things can change rather quickly, so the trade war, if a lot of the threats do materialise, I think things will turn very quickly.”
Trump has already imposed 25 per cent tariffs on $US50 billion worth of Chinese goods, mostly industrial machinery and intermediate electronics parts, including semiconductors.
The $US200 billion list, which includes some consumer products such as cameras and recording devices, luggage, handbags, tires and vacuum cleaners, would be subject to tariffs of 10 per cent to 25 per cent.
Mobile phones, the biggest US import from China, have so far been spared, but would be engulfed if Trump activates the $US267 billion tariff list.
Trump’s threatened tariffs, now totalling $US517 billion in Chinese goods, would exceed the $US505 billion in goods imported from China last year. But 2018 Chinese imports through July were up nearly 9 per cent over the same period of 2017, according to US Census Bureau data.
Earlier on Friday, White House economic adviser Larry Kudlow told Bloomberg Television the administration would evaluate public comments before making decisions on the $US200 billion tariff list.
Nearly every consumer good affected
The US Trade Representative’s office received nearly 6,000 comments and held seven days of public hearings on the proposed levies.
Most comments were from companies seeking to remove products from the tariff list, arguing there were few, if any alternative sources and the duties would cause financial hardship. Comparatively few applauded the tariffs.
Retailers had successfully kept high-profile consumer electronics such as mobile phones and television sets off of previous tariff lists. But David French, top lobbyist for the National Retail Federation, whose members include Amazon.com , BJ’s Wholesale Club and Macy’s, said nearly every consumer good could be affected if Trump follows through on all threatened tariffs.
“The Chinese aren’t paying these tariffs, American families are going to pay these tariffs. These are taxes and they’re going to find their way into the pocket book of folks around the country,” French said.
Still talking to China
Kudlow, who heads the National Economic Council, told CNBC the administration was still talking with China about trade issues but so far China had not met US requests.
The United States has demanded that China better protect American intellectual property, cut its US trade surplus, allow US companies greater access to its markets and roll back its high-technology industrial subsidy programs.
“We are still talking with China on a number of issues … Those talks will continue to go on. We want lower (trade) barriers across the board,” Kudlow said.
Specifically, Kudlow said, the United States was seeking “zero tariffs, zero non-tariff barriers, zero subsidies, stop the IP theft, stop the technology transfer, allow Americans to own their own companies.”
“Those have been our asks for many months and so far those asks have not been satisfied,” he said. “However, hope springs eternal.”