China said Monday it would impose tariffs on $60 billion worth of imports from the United States, retaliating after President Donald Trump boosted taxes on $200 billion worth of Chinese goods sent to the U.S. and moved to impose duties on another $300 billion of Chinese exports.
The Chinese finance ministry said its new 5% to 25% tax would be imposed June 1 and affect 5,140 U.S. products exported to China. Beijing said its response was targeting “U.S. unilateralism and trade protectionism.”
“China will never succumb to foreign pressure,” the foreign ministry said. “We are determined and capable of safeguarding our legitimate rights and interests. We still hope that the U.S. will meet us half way.”
The new Chinese taxes came hours after Trump, on Twitter, urged China not to strike back, claiming that “China has taken so advantage of the U.S. for so many years, that they are way ahead (Our Presidents did not do the job). Therefore, China should not retaliate-will only get worse!”
The escalation of the tit-for-tat tariff increases had an immediate effect on the U.S. stock market, with the key Dow Jones Industrial Average plunging more than 2% in mid-day trading in New York.
The Chinese announcement came after the world’s two biggest economies ended their latest trade talks Friday in Washington without reaching a deal.
‘Both sides will suffer’
Chief White House economic adviser Larry Kudlow told Fox News Sunday that “both sides will suffer” from the escalating trade war.
Trump claimed in another tweet, that “Their (sic) is no reason for the U.S. Consumer to pay the Tariffs, which take effect on China today.” But Kudlow acknowledged, “In fact, both sides will pay. Both sides will pay in these things.”
The U.S. leader has claimed that the Chinese government unfairly subsidizes Chinese companies and steals intellectual property from U.S. firms to manufacture its own products.
Kudlow said that in the U.S. “maybe the toughest burdens” are on farmers who sell soybeans, corn and wheat to China. But he said the Trump administration has “helped them before on lost exports” with $12 billion in past subsidies and that “we’ll do it again if we have to and if the numbers show that out.” Trump has said he will ask Congress to approve another $15 billion in farm subsidies to offset lost sales to China.
‘Right where we want to be’
Trump said on Twitter Sunday “We are right where we want to be with China.”
Trump on Friday more than doubled tariffs on $200 billion of Chinese goods, boosting the rate from 10% to 25%, while also moving to impose tariffs on an additional $300 billion of Chinese products, although Kudlow said it could take months for the full effect of the tariffs to be felt. China had previously imposed taxes on $110 billion of American products before Monday’s tariff increase.
Despite the break-off in trade talks Friday, Kudlow said, “We were moving well, constructive talks and I still think that’s the case. We’re going to continue the talks as the president suggested.”
Kudlow said Trump and Chinese President Xi Jinping are likely to discuss trade issues at the G-20 summit in Japan at the end of June.
The economic adviser renewed U.S. claims that China had backtracked from earlier agreements reached in the talks, forcing negotiators to cover “the same ground this past week.”
“You can’t forget this: This is a huge deal, the broadest scope and scale ….two countries have ever had before,” Kudlow said. “But we have to get through a lot of issues. For many years, China trade was unfair, non-reciprocal, unbalanced in many cases, unlawful.”
The U.S. has claimed that China steals technology and forces U.S. companies to divulge trade secrets it uses in its own production of advanced technology products.
On Saturday, Trump suggested that China could be waiting to see if he wins reelection next year, but said Beijing would be “much worse” off during a second term of his in the White House.