US President Donald Trump has escalated the country’s trade war with China by announcing plans to hike the 10% tariff imposed on US$200bn of Chinese goods to 25% on 10 May.
Trump announced his move on Twitter on 5 May, saying that negotiations between the two countries were proceeding too slowly.
“For 10 months, China has been paying tariffs to the USA of 25% on US$50bn of high tech, and 10% on US$200bn of other goods,” he tweeted. “These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday.”
The move will affect more than 5,000 products including fresh and frozen food, chemicals, textiles, electronics, consumer goods, butter, grains, flaxseed, rapeseed, sunflower seed, other oilseeds such as hemp and niger, soyabean flour and meal, and other oilseed flour and meal.
Trump also threatened to impose 25% tariffs on US$325bn of additional Chinese goods.
His announcement caused falls in US, Europe and Asian stocks on 6 May but confirmation from Chinese authorities that they would still send officials to meet with Trump for trade talks led markets to recover.
The US-China trade war began in July 2018, when Trump announced tariffs on various Chinese products, and China responded with retaliatory 25% tariffs on US products, including soyabeans. The USA then imposed 10% tariffs on US$200bn worth of Chinese imports on 24 September, which prompted China to impose 25% duties on a wide range of US food products including several edible oils. On 1 December, the two countries reached a temporary truce, agreeing not to impose additional tariffs on each other’s goods, and analysts had believed a new trade deal was close.
“What remains to be seen is whether Trump’s wielding of the tariff hammer at a stage of negotiations where the majority through a new trade agreement with China was close, could be a ploy to jawbone an immediate resolution to the drawn-out trade talks that have dictated market sentiment for close to a year,” FXTM Research was quoted by CEO magazine as saying.