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Trade war

Trump raises tariffs to 30% in tit for tat with Beijing

President says US doesn't need China and 'orders' companies to search alternatives

U.S. President Donald Trump answers questions from reporters in the Oval Office of the White House on August 20. In a sharp escalation of the trade war, the president raised tariff rates on Chinese goods on Friday.   © Reuters

WASHINGTON/BEIJING -- In a sharp escalation of the trade war, U.S. President Donald Trump said he will raise the tariff rate on both existing and planned levies on Chinese goods.

In a Friday afternoon tweet, after the U.S. stock market closed, Trump said that the existing 25% on $250 billion worth of goods will be hiked to 30% as of Oct. 1. The planned 10% tariff on the remaining $300 billion in goods will instead be 15%, he added.

The announcement came hours after China's State Council said it will impose additional tariffs of 5% or 10% on $75 billion worth of American products, retaliating against the latest round of tariffs announced by the U.S.

"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," Trump tweeted. "As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship."

"China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!)," he wrote.

China's tariffs apply to a total of 1,717 products such as soy beans, crude oil, steel plate and chemicals will be affected beginning Sept. 1, with another 3,361 items including lumber, automobiles and textiles to follow Dec. 15. The dates coincide with the start of new U.S. tariffs on Chinese exports.

China already has imposed tariffs on $110 billion of its imports from the U.S., or 70% of the total. Only $40 billion worth remains unaffected, meaning Beijing will double down on levies for certain items with its latest decision.

"We don't need China and, frankly, would be far better off without them," President Donald Trump tweeted earlier on Friday in Washington, in response to Beijing's announcement. "Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA."

Trump's tweets triggered a sell-off on Wall Street as investors braced for a further escalation of the U.S.-China trade war. The Dow Industrial Average closed 623 points lower at 25,628.90. 

The Office of the United States Trade Representative issued a statement Friday afternoon labeling China's additional tariffs as  "unjustified." In response,  "President Trump has instructed the United States Trade Representative (USTR) to increase by 5% the tariffs on approximately $550 billion worth of Chinese imports," it said referring to both tariff hikes. It said the hike to 30% for the existing tariffs will be implemented "following a notice and comment period."

Shortly after a cabinet-level meeting between the two sides at the end of July, the U.S. said it would enact an additional tariff on about $300 billion worth of Chinese products starting in September. The Trump administration later postponed the date to December for half of the affected balance, including smartphones and toys, amid concerns of the tariff's effect on the holiday shopping season.

Some had hoped the delay would create more room for the two sides to reach an agreement. Still, any new American tariff hike will escalate trade frictions, Chinese Commerce Ministry spokesperson Gao Feng said Thursday.

"If the United States acts arbitrarily, China will have to take countermeasures," he said.

The two countries plan another cabinet-level meeting during early September in Washington. The State Council, China's cabinet, said that "cooperation is the only correct choice for China and the United States" in its statement announcing the latest tariffs, but the talks could fall through should tensions escalate.

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