U.S. President Donald Trump is firing the biggest shot yet in the global trade war by imposing tariffs on $34 billion of Chinese imports, delivering on a promise to his political supporters that risks provoking retaliation and harming the world economy.
The duties on Chinese goods will go forward just after midnight, Trump told reporters on Air Force One on his way to Montana on Thursday. Another $16 billion of goods could follow in two weeks, Trump said, before suggesting the final total could eventually reach $550 billion, a figure that exceeds all of China’s annual goods exports to the U.S.
As of 12:01 a.m. Friday in Washington, U.S. customs officials are set to begin collecting 25 percent tariffs on Chinese imports of goods ranging from to farming plows to semiconductors and airplane parts. It’s the first time the U.S. has imposed tariffs directly aimed at Chinese goods following months in which Trump accused Beijing of stealing American intellectual property and unfairly swelling America’s trade deficit.
The riskiest economic gamble of Trump’s presidency could spread as it enters a new and dangerous phase by imposing direct costs on companies and consumers globally. China has vowed to hit back in kind on goods ranging from American soybeans to pork, which may in turn prompt Trump to raise trade barriers even higher.
“Once these tariffs start going into effect, it’s pretty clear the conflict is real,” said Robert Holleyman, former deputy U.S. trade representative under President Barack Obama and now a partner at law firm Crowell and Moring LLP. “If we don’t find an exit ramp, this will accelerate like a snowball going down a hill.”
Recent U.S. tariffs on steel and aluminum antagonized fellow rich nations and drew return fire from the European Union and Canada.
Iconic American companies such as Harley-Davidson Inc. are among those set to suffer. The motorcycle maker said this month it may move production out of the U.S. to avoid EU tariffs on its bikes. American businesses from Apple Inc. and Walmart Inc. to General Motors Co. all operate in China and are keen to expand. That hands Chinese President Xi Jinping room to impose penalties such as customs delays, tax audits and increased regulatory scrutiny if Trump delivers on his threat of bigger duties on Chinese trade.
Chinese stocks have taken a beating in recent weeks, entering a bear market, as concerns about the trade war have mingled with worries about China’s ability to control its debt and maintain growth. U.S. stocks are up slightly more than 2 percent this year as investors have weighed the threat of trade frictions against the strong performance of the U.S. economy.
Trump is doubling down on his promise to put “America First” in the nation’s foreign and economic policies. He blames China for a bilateral trade deficit of $336 billion and for costing U.S. manufacturing jobs.
Politically, the get-tough-on-China campaign is aimed at helping score points with the voters who propelled Trump to the White House even though some members of his Republican party — particularly those in farming states that could be hit by retaliation — urged a retreat. Failure that brings economic pain could cost Republican seats in November’s mid-term elections.By