President Donald Trump announced in a series of Twitter posts Friday that he would be imposing a higher rate of tariffs on some Chinese imports, after China earlier in the day said it would be slapping tariffs on another $75 billion worth of U.S. goods.
The additional levies are set to roll out in two tranches. The $300 billion worth of imports from China that were set to be taxed at a 10% rate on September 1 will now be taxed at a 15% rate. And starting October 1, the $250 billion worth of Chinese imports currently taxed at 25% will be taxed at a rate of 30%, Trump said.
The Office of the U.S. Trade Representative followed up with a press release reiterating Trump’s new tariff announcements shortly after the Twitter posts.
....Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very....— Donald J. Trump (@realDonaldTrump) August 23, 2019
...Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!— Donald J. Trump (@realDonaldTrump) August 23, 2019
“This illustrates the speed at which the trade war is now escalating and there is no way of knowing where it will end,” Paul Ashworth, chief U.S. economist for Capital Economics, said in a note. “It is fears about where the trade war is going that will now weigh even more heavily on financial markets and business investment in the coming months – and that is where the real damage to the US economy will be done.”
Trump’s announcement came about an hour after market close Friday. Earlier in the session, the Dow fell more than 700 points on an intraday basis after Trump wrote in Twitter post that he was ordering U.S. companies to “immediately start looking for an alternative to China” for their business operations. In the same Twitter thread, he also said he was ordering carriers including FedEx (FDX), Amazon (AMZN) and UPS (UPS) to “search & refuse” Chinese packages containing the drug fentanyl.
The Twitter storm Friday came as Federal Reserve officials gathered in Jackson Hole for the central bank’s annual symposium. During the summit, central bankers and global economists alike called out the economic threat posed by the rapidly intensifying trade war.
Fed Chair Jerome Powell described the difficulty central bankers were having in modeling the economic outlook, given that there were “no recent precedents” to guide monetary policy in the throes of the escalating trade war. Powell reiterated the Fed’s commitment to “act as appropriate” to support the current economic expansion, adding that the U.S. economy was in a “favorable place” despite “significant” lingering risks.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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