BEIJING (AP) – Escalating its trade war with the U.S. and sending world financial markets into a slide, China announced higher tariffs Monday on $60 billion worth of American goods in retaliation for President Donald Trump’s latest penalties on Chinese products.
Tariffs of 5% to 25% will take effect on June 1 on about 5,200 American products, including batteries, spinach and coffee, the Finance Ministry said.
The announcement followed a move by the U.S. on Friday to raise duties on $200 billion of Chinese imports to 25%, up from 10%. American officials did so after accusing China of backtracking on commitments it made in earlier negotiations.
With investors unnerved by the potential for economic damage on all sides, stocks sank across the globe. The Dow Jones industrial average was down more than 600 points, or close to 2.5%, in midafternoon trading, while the Standard & Poor’s 500 also sank nearly 2.5%. Earlier, stocks fell in Europe and Asia.
Two days of trade negotiations between U.S. and Chinese representatives broke up Friday without any agreement. Both countries have indicated more talks are likely.
Top White House economic adviser Larry Kudlow said on Sunday that China has invited U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing. But nothing has been scheduled. And Trump said Monday that he expects to meet Chinese President Xi Jinping in late June at the G-20 summit in Osaka, Japan.
The two countries have given themselves some breathing room: The higher Chinese tariffs don’t kick in for 2½ weeks. The U.S. increases apply to Chinese goods shipped since Friday, and those shipments will take about 3 weeks to arrive at U.S. seaports and become subject to the higher charges.
On Twitter, Trump warned Xi that China “will be hurt very badly” if it doesn’t agree to a trade deal. Trump tweeted that Beijing “had a great deal, almost completed, & you backed out!”
The president has repeatedly insisted, most recently on Monday, that increased tariffs on Chinese goods don’t hurt American consumers. But Kudlow, head of the president’s National Economic Council, acknowledged over the weekend that U.S. consumers and businesses will bear some of the costs.
“Both sides will pay,” he told Fox News.
In the U.S., prices of soybeans, targeted by Chinese tariffs last year, fell Monday to a 10-year low on fears of a protracted trade war.
Trump told reporters Monday that a new program to relieve U.S. farmers’ pain is “being devised right now” and predicted that they will be “very happy.”