WASHINGTON/BEIJING (Reuters) - President Donald Trump on Friday pressured US companies to leave China after Beijing unveiled retaliatory tariffs on $75 billion (61.11 billion pounds) in US goods, stoking fears their escalating trade war will tip the global economy into recession.
Trump, who has accused China of unfair trade practices and pushed for a deal that would rebalance the relationship in favour of US manufacturers and workers, said on Twitter he will issue a response to Beijing’s latest tariff plan on Friday afternoon.
The president was meeting with his trade team at midday, a senior White House official told Reuters.
“We don’t need China and, frankly, would be far better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP,” Trump tweeted.
“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.”
It’s unclear what legal authority Trump would be able to use to compel US companies to close operations in China or stop sourcing products from the country.
Trump also said he was ordering shippers including FedEx (FDX.N
). Amazon.com Inc (AMZN.O
), UPS (UPS.N
) and the U.S. Postal Service to search out and refuse all deliveries of the opioid fentanyl to the United States.
The US Chamber of Commerce rebuffed Trump’s call, urging “continued, constructive engagement” so that the world’s two largest economies could quickly reach a trade deal.
“Time is of the essence. We do not want to see a further deterioration of US-China relations,” Myron Brilliant, executive vice president and head of the business group’s international affairs, said in a statement.
China on Friday said it would impose retaliatory tariffs on $75 billion of US goods, targeting crude oil for the first time and renewing punitive duties on American-made autos.
The latest salvo was in response to Trump’s plans to impose 10% tariffs on a final $300 billion list of Chinese-made consumer goods on Sept 1 and Dec 15, including cell phones, toys, laptop computers and clothing.
China’s Commerce Ministry said that on those same dates it will impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States including agricultural products such as soybeans, beef and pork, as well as small aircraft. Beijing is also reinstituting tariffs on cars and auto parts originating from the United States that it suspended last December as US-China trade talks accelerated.
“We want a deal, but it doesn’t mean we want a deal that is not based on mutual respect or good for China’s interests,” a Chinese diplomatic source said. “If the United States levies tariffs, China will have counter-measures.”
US stocks fell sharply. The tech-heavy Nasdaq Composite .IXIC
was down 2.6%, the S&P 500 index .SPX
fell 2.1% and the Dow Jones Industrial Average .DJI
shed 1.9%. US Treasury yields also fell as investors sought safe-haven assets.
US crude futures were down more than 2%.
White House trade adviser Peter Navarro told Fox Business Network that US-China trade talks would nevertheless go ahead in September and dismissed the Chinese tariff threat as small in terms of the U.S. economy.
On Thursday, top White House economic adviser Larry Kudlow said there was progress in a deputy-level US-China trade call this week. But neither side so far appears to be ready to make a significant compromise needed to end the nearly 14-month-old trade war.
The trade dispute has stoked fears about a global recession, shaking investor confidence and prompting central banks around the world to ease policy in recent months.
In an interview on CNBC, Federal Reserve Bank of Cleveland President Loretta Mester said she viewed the Chinese retaliatory tariffs as “just a continuation” of the aggravated trade policy uncertainty that has begun weighing on U.S. business investment and sentiment.
Agriculture, auto sectors hit
The knock-on impact of the US-China trade tensions was a key reason behind the U.S. Federal Reserve’s move to cut interest rates last month for the first time in more than a decade.
“The president’s trade war threatens to push the economy into a ditch,” said Mark Zandi, chief economist at Moody’s Analytics. “The president is hoping that the Federal Reserve will ... bail him out, but if he continues to pursue the war, the Fed won’t be up to the task.”
In a keynote speech at the Fed’s annual central banking conference in Jackson Hole, Wyoming, on Friday, Fed Chair Jerome Powell said the US central bank would “act as appropriate” to keep the economy healthy but did not say how fast it might cut rates.
Among US goods targeted by Beijing’s latest tariffs were soybeans, which will be hit with an extra 5% tariff starting Sept 1. China will also tag beef and pork from the United States with an extra 10% tariff.
Although the Trump administration has rolled out aid to farmers stung by China’s tariffs, there is growing frustration in America’s agricultural belt, a key political constituency for Trump as he heads into his 2020 re-election campaign.
“The view from much of farm country is bleak and anger is boiling over. With bankruptcies and delinquencies rising and prices falling, the frustration with the lack of progress towards a deal is growing,” the bipartisan Farmers for Free Trade group said in a statement.
China is also reinstituting an additional 25% tariff on US-made vehicles and a 5% tariff on auto parts that had been suspended at the beginning of the year. Carmakers such as Daimler (DAIGn.DE
) and Tesla (TSLA.O
) had adjusted their prices in China when the auto and auto parts tariffs had been suspended.
), a net exporter to China, said in a statement it encouraged the United States and China to find a near-term solution.
“It is essential for these two important economies to work together to advance balanced and fair trade,” the company said.