WASHINGTON — The US President Donald Trump said he would increase taxes on all Chinese goods and demanded that American companies stop doing business with China as his anger toward Beijing and his Federal Reserve chair boiled over on Friday.
Twelve hours after China said it would retaliate against Trump’s next round of tariffs by raising taxes on American goods, the US President said he would bolster existing tariffs on $250 billion worth of Chinese goods to 30 per cent from 25 per cent on October 1.
He also said he would tax an additional $300 billion worth of Chinese imports at a 15 per cent, rather than the 10 per cent he had initially planned. Those levies go into effect on 1 September.
“China should not have put new Tariffs on $75 billion of United States product ” Trump said on Twitter. “Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%.”
In a series of angry tweets earlier in the day, Mr. Trump called for American companies to cut ties with Beijing and said the United States would be economically stronger without China. Those comments sent stocks plunging, helping push the market to its fourth straight weekly loss. The president also called the Fed chair, Jerome H. Powell, an “enemy” of the United States and compared him to President Xi Jinping of China, his trade nemesis, after Mr. Powell declined to signal an imminent cut in interest rates.
Mr. Trump has been counting on Mr. Powell to help blunt the effect of his trade war by cutting interest rates to keep the economy humming. While Mr. Powell said on Friday that the Fed could push through another cut if the economy weakened further, he suggested that the central bank’s ability to limit economic damage from the president’s trade war was constrained.
“My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” the president tweeted.
Stocks fell sharply on Friday, with the S&P 500 closing down 2.6 per cent. The Dow Jones industrial average was down slightly more than 2 per cent and the technology-heavy Nasdaq index fell 3 per cent.
Behind the tirade was the growing reality that the type of trade war Mr. Trump once called “easy to win” is proving to be more difficult and economically damaging than the president envisioned. Mr. Trump’s stiff tariffs on Chinese goods have been met with reciprocal levies, hurting American farmers and companies and contributing to a global slowdown.
On Friday, China said it would increase tariffs on $75 billion worth of American goods, including crude oil, automobiles and farm products like soybeans, pork and corn in response to Trump’s plan to tax an additional $300 billion worth of Chinese goods in September and December.
The higher rates will only aggravate the financial pain from the trade war, which is already raising prices for businesses and consumers across the globe. Even before the new 30 per cent rate, Mr. Trump’s existing tariffs were expected to cost the average American household more than $800 a year, according to research by the Federal Reserve Bank of New York. And Mr. Trump’s next $300 billion tranche will affect consumer products like toys, smartphones and clothing.