Trump Raises Tariffs as Trade War Escalates

Even by the turbulent standards of the Trump presidency, his actions Friday, all via Twitter, were notable.

In this Aug. 14, 2019, photo, a woman works on a production line in a fiber optics factory in Nantong, China.
In this Aug. 14, 2019, photo, a woman works on a production line in a fiber optics factory in Nantong, China.
Chinatopix via AP

WASHINGTON (AP) β€” Escalating his trade fight with China, President Donald Trump has raised retaliatory tariffs and ordered American companies to consider alternatives to doing business there.

He also blamed his appointed head of the U.S. central bank, Federal Reserve Chairman Jerome Powell, for the state of the domestic economy and wondered who was a "bigger enemy" of the U.S. β€” Powell or Chinese President Xi Jinping.

Even by the turbulent standards of the Trump presidency, his actions Friday, all via Twitter, were notable. They sent markets sharply lower and added to a sense of uncertainty during his visit to France for a meeting of global economic powers.

Trump's move came after Beijing announced it had raised taxes on U.S. products.

The president attacked the Fed for not lowering rates at an informal gathering in Jackson Hole, Wyoming, where no such action was under consideration. Powell, speaking to central bankers, gave vague assurances that the Fed would act to sustain the nation's economic expansion, but noted that Fed had limited tools to deal with damage from the trade dispute.

Trump said he would be raising planned tariffs on $300 billion in Chinese goods from 10% to 15%. The Office of the U.S. Trade Representative also said existing tariffs on another $250 billion in Chinese imports would go from 25% to 30% on Oct. 1 after receiving feedback from the public.

Late Friday, Trump told reporters at the White House: "I have no choice. We're not going to lose close to a trillion dollars a year to China." He insisted that "tariffs are working out very well for us. People don't understand that yet."

The Chinese government, in a statement posted on the Commerce Ministry's website Saturday, railed against "this kind of unilateral, bullying trade protectionism" urged the Trump administration to "immediately stop its mistaken course of action, or else the U.S. will have to bear all the consequences."

The impact of higher tariffs could be sweeping for consumers.

Trump's latest escalation will impose a burden on many American households. Even before he announced an increase, J.P. Morgan had estimated that Trump's tariffs would cost the average household roughly $1,000 a year if he proceeded with his threats.

Trump appeared caught off-guard by China's tariff increase, and was angry when he gathered with his trade team in the Oval Office before departing for France, according to two people familiar with the meeting who spoke to The Associated Press on condition of anonymity because they were not authorized to disclose closed-door conversations.

Earlier, the president said he "hereby ordered" U.S. companies to seek alternatives to doing business in China. The White House did not cite what authority the president could use to force private businesses to change their practices.

Businesses large and small joined in a chorus of opposition to the intensifying hostilities.

"It's impossible for businesses to plan for the future in this type of environment," said David French, senior vice president of government relations at the National Retail Federation. "The administration's approach clearly isn't working, and the answer isn't more taxes on American businesses and consumers. Where does this end?"

If Trump goes ahead with all the tariffs he's announced, they would cover just about everything China ships to the United States.

China imposed new tariffs of 5% and 10% on $75 billion of U.S. products in retaliation. Like Trump's, the Chinese tariffs will be imposed in two batches β€” first on Sept. 1 and then on Dec. 15.

China will also go ahead with previously postponed import duties on U.S.-made autos and auto parts, the Finance Ministry announced.

Trump tweets Friday included one declaring, "Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing ... your companies HOME and making your products in the USA."

French, at the National Retail Federation, said it was "unrealistic for American retailers to move out of the world's second largest economy. ... Our presence in China allows us to reach Chinese customers and develop overseas markets."

Jay Foreman, CEO of Basic Fun!, a Florida toy company that imports from China, said Trump's demand to American companies was outrageous.

It was an "unprecedented statement for a president to make to private business when there is no national security issue involved," he said.

The 13-monthlong feud between the U.S. and China has been rattling financial markets, disrupting international trade and weakening prospects for worldwide economic growth.

Washington accuses China of using predatory tactics - including outright theft of U.S. trade secrets - in an aggressive drive to turn itself into a world leader in cutting-edge technologies such as artificial intelligence and electric cars.

Twelve rounds of talks have failed to break the impasse, though more negotiations are expected next month. Chinese leaders have offered to alter details of their policies but are resisting any deal that would require them to give up their aspirations to become a technological powerhouse.

The two countries are also deadlocked over how to enforce any agreement.

Tariff increases on Sept. 1 apply to 1,700 items ranging from frozen sweet corn, dried beef and pork liver to marble, other building materials and bicycle tires, according to the Chinese Finance Ministry.

Penalties that take effect Dec. 15 cover 3,300 items including coffee, cinnamon, industrial chemicals and scissors, the ministry said.

The Chinese said tariffs of 25% and 5% would be imposed on U.S.-made autos and auto parts on Dec. 15. Beijing had planned those tariff increases last year but temporarily dropped them to keep the talks going.

BMW, Tesla, Ford and Mercedes-Benz are likely to be the hardest hit by the Chinese auto tariffs.


McDonald reported from Beijing. Associated Press writers Tom Krisher in Detroit, Anne D'Innocenzio in New York and Kevin Freking and Deb Riechmann in Washington contributed to this report.

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