Washington D.C., USA : President Donald Trump on Monday announced new tariffs on $200 billion worth of Chinese goods imported into the United States. Trump also threatened to add tariffs on about $267 billion of additional imports if China retaliates against U.S. farmers or other industries.
It’s the latest round of an escalating trade dispute between the two countries. The tariffs follow duties on $50 billion in goods imposed earlier this year.
Trump said the new tariffs will begin at a level of 10 percent on Sept. 24, and will increase to 25 percent on Jan. 1. He added if China “takes retaliatory action against our farmers or other industries” the administration will immediately implement tariffs on approximately $267 billion of additional imports.
“As president, it is my duty to protect the interests of working men and women, farmers, ranchers, businesses, and our country itself,” Trump said. “My administration will not remain idle when those interests are under attack.”
Earlier Monday, White House chief economic adviser Larry Kudlow said at the Economic Club of New York, “We are ready to negotiate and talk with China any time that they are ready for serious and substantive negotiations” to reduce trade barriers.
In remarks earlier in the day, Trump predicted an eventual deal with Beijing. “I think it’s going to work out very well with China,” he said. “They want to make a deal. But from our standpoint, it has to be fair. It has to take care of our workers.”
The United States and China have been engaged in an ongoing trade war after the Trump administration imposed tariffs on the country over theft of intellectual property.
Most recently, the United States imposed $16 billion worth of Chinese goods including motorcycles, railway cars and thermometers in August and China responded by announcing 25 percent duties on 333 U.S. imports worth $16 billion.
“China has had many opportunities to fully address our concerns,” Trump said on Monday. “Once again, I urge China’s leaders to take swift action to end their country’s unfair trade practices. Hopefully, this trade situation will be resolved, in the end, by myself and President Xi [Jinping] of China, for whom I have great respect and affection.”
China will reject new trade talks if President Donald Trump moves ahead with the next round of U.S. tariffs on Chinese products, throwing into doubt the prospect of a diplomatic breakthrough, according to two people familiar with the matter.
Beijing has already said it will retaliate for the new round of tariffs. Chinese officials have also signaled to U.S. counterparts that Mnuchin’s talks won’t happen.
China no longer can match U.S. tariffs on a dollar-for-dollar basis, since it imports only $135 billion of American products. But Chinese officials have other ways of making the U.S. hurt, including by harassing American multinationals with tax audits and customs inspections or even mobilizing consumer boycotts against them.
Business groups are pinning their hopes for defusing the standoff on talk that Trump and Xi could meet this fall on the sidelines of an international gathering such as the G20 summit in Buenos Aires in November.
A decision to back away from confrontation with China could only be made by one man. “China trade is now a presidential level, political issue. It was not under Obama. And it was not under Bush,” said Derek Scissors, a China expert at the American Enterprise Institute. “Now everything is subject to the president deciding.”
U.S. stock index futures extended losses in post-market trading late Monday after President Trump announced a new round of tariffs on about $200 billion worth of Chinese imports.
S&P 500 e-mini futures EScv1 were down 0.3 percent in trading for the overnight session.
Earlier, U.S. stocks closed lower on Monday, led by declines in technology and consumer discretionary stocks ahead of President Donald Trump’s announcement regarding tariffs on $200 billion of Chinese imports.
“Although this was expected and we sold off before the close, one would think the market should be down more,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
“It’s at the point, the larger these tariffs become, the bigger the problem they become for the administration and the United States. It ups the ante in a significant way, as far as you’re starting to cut some muscle. Consumers will start feeling it.”
Earlier, China vowed that it will not play defense in the escalating trade dispute, adding further fuel to tensions as a new list of items subject to tariffs, including technology and consumer goods, was anticipated from Washington.
“This is the sixth or seventh time we talked about this particular round of tariffs,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “As long as Trump is comfortable raising tariffs, he believes he’s winning.”
Consumer discretionary .SPLRCD and technology .SPLRCT were the biggest percentage losers on the S&P 500 index during the regular session, falling 1.3 percent and 1.4 percent, respectively.
Amazon.com (AMZN.O) led consumer discretionary stocks lower, falling 3.2 percent.
Apple Inc (AAPL.O) has said the moves could hit a “wide range” of its products. The iPhone maker’s shares were down 2.7 percent, providing the biggest drag on the Dow, despite earlier reports that the United States would spare some of its products in the latest round of tariff actions.
All of the so-called FAANG group of momentum stocks closed down between 1.0 percent and 3.9 percent. Other FAANG stocks include Netflix (NFLX.O), Facebook (FB.O) and Google-parent Alphabet (GOOGL.O).
“(The FAANG stocks have) had great runs; the fact that they’d come off a little bit really doesn’t detract from the fact that they’ve put in some very good performance numbers this year,” Nolte said. But he noted “investors might be slowly looking outside of tech for the next opportunity.”
The Dow Jones Industrial Average .DJI fell 92.55 points, or 0.35 percent, to 26,062.12, the S&P 500 .SPX lost 16.18 points, or 0.56 percent, to 2,888.8 and the Nasdaq Composite .IXIC dropped 114.25 points, or 1.43 percent, to 7,895.79.
All three major U.S. indexes were lower, with the tech-heavy Nasdaq posting its biggest percentage loss since late July.
The S&P 500’s slide was concentrated. Of the 11 major sectors in the index, only four ended the session in negative territory.
The CBOE Volatility index .VIX, a gauge of investor anxiety, rose 1.54 points, its first increase in six sessions.
Retailers, including Macy’s Inc (M.N) and Kohls Corp (KSS.N), dropped, helping pull the S&P 500 retailers index .SPXRT 2.1 percent lower.
Twitter (TWTR.N) fell 4.2 percent, the biggest percentage loser in the S&P 500 technology index, after brokerage MoffettNathanson flagged concerns over rising expenses.
Declining issues outnumbered advancing ones on the NYSE by a 1.46-to-1 ratio; on Nasdaq, a 2.12-to-1 ratio favored decliners.
The S&P 500 posted 34 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 51 new highs and 90 new lows.
Volume on U.S. exchanges was 6.21 billion shares, compared with the 6.14 billion average over the last 20 trading days.