President Trump sent stocks tumbling and prompted new fears of a global trade war Thursday as he punished China with $60 billion worth of trade sanctions for stealing American technology.
The Chinese government vowed to retaliate and defend its interests. Within hours, it announced it may set tariffs on U.S. pork, aluminum and other goods.
“We have spoken to China and we are in the midst of a very large negotiation,” Trump said Thursday. “We will see where it takes us.”
The uncertainty did not resonate well on Wall Street as financial markets skidded — with the Dow Jones industrial average plunging 724 points, or 2%.
Three ways a trade war with China could affect Americans
Trump instructed the Treasury Department to pursue restrictions on certain Chinese products and placed restrictions on Chinese investments in the U.S., chilling trading of industrial and technology companies, which depend heavily on foreign trade.
Trump, who accused China of currency manipulation and unfair trade practices on the campaign trail, said the U.S. has been taken advantage of for too long.
“It is the largest deficit of any country in the history of our world,” Trump said of the U.S.-China trade imbalance, blaming it for lost American jobs.
A list of targeted products will be released within 15 days and a 30-day public comment period will follow.
Trump eyes $50B in China tariffs for intellectual property theft
The tariffs are expected to be levied on a wide variety of goods, including shoes, clothes and some consumer electronics.
A trade war with China could lead to a rise in the cost of goods for many Americans and adversely affect farmers in the U.S.
Retailers including Costco, Target, Macy’s and Walmart have warned that tariffs will lead to skyrocketing prices for American shoppers.
Peter Donisanu, an investment strategy analyst for the Wells Fargo Investment Institute, told The Associated Press that the risk of a damaging trade war remains relatively low because the Trump administration is targeting specific goods that aren’t central to China’s economy.
But that could change if it puts tariffs on products like electronics or appliances imported from China.
“If the Trump administration really wanted to hurt China and start a trade war, then they would go after those larger sectors,” he said.
Additionally, China owns more U.S. bonds than any other country and is one of the biggest purchasers of American produce.
Beijing could also impose retaliatory tariffs on soybeans or sorghum or decide to buy from other countries like Brazil or Argentina instead.
“China is not afraid of and will not recoil from a trade war. China is confident and capable of facing any challenge,” the Chinese embassy said in a statement.
Trump decided to impose tariffs following a seven-month investigation that found China used hackers to steal commercial secrets from U.S. companies and demanded companies hand over trade secrets in exchange for access to the Chinese market.
“It’s unrealistic and unreasonable to demand complete equality in trade,” Chinese Foreign Ministry spokeswoman Hua Chunying told reporters. “We hope that both sides can sit down and talk calmly.”
The Trump administration argued that years of negotiations with China have failed to produce results.
The economic penalties come just weeks after Trump announced plans to impose steep tariffs on foreign metals — a move that also rattled markets.
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