SHANGHAI — China said it would impose tariffs on $75 billion in U.S.-made goods if President Donald Trump carries through on his promise to escalate his trade war with Beijing, in a sign that neither side is ready to back down from an economic conflict that has already cast a shadow over global growth prospects.
China’s plans to retaliate, which were announced late on Friday in Beijing, include putting tariffs on U.S. agricultural products, crude oil and cars.
“I think China’s trying to show that, cooperation or fight, it is ready to do both and it is not going to be pressured into an unfavorable trade deal,” said Andy Mok, a trade and geopolitics specialist at the Center for China and Globalization in Beijing.
Mok said that China’s willingness to impose a tariff on imports of crude oil from the United States, even though China needs a lot of imported oil, shows Beijing’s determination. “One way you show your seriousness in a negotiation is to show you’re willing to incur costs,” he said.
The State Council Tariff Commission in Beijing said that the tariffs were a response to Trump’s threat to impose new tariffs by Sept. 1. Trump had initially said he would impose 10% tariffs on $300 billion in Chinese-made goods on that date, essentially targeting everything that the United States buys from China that has not already been hit by previous rounds of tariffs. He later delayed more than half of the latest round of tariffs until Dec. 15 to avoid hitting American pocketbooks during the holiday shopping season, and he canceled another one-tenth of it.
Both sides have a lot at stake. Recent market moves have signaled that many investors expect the U.S. economy to slide into recession in the future, with the trade war as a major reason.
The Chinese government has its own worries. The country’s economic growth is already slowing. Though the Chinese government keeps tight control over the country’s economy and still has a lot of financial firepower at its disposal to help growth, a huge and growing debt problem has limited its options.
Like the U.S. tariffs, China’s proposed tariffs would go into effect in two stages. The new tariffs would take effect on Sept. 1 and on Dec. 15, according to the commission. Those dates match when Trump’s tariffs would go into effect. The commission did not provide the value of how much would be penalized in the first batch and how much in the second.
Wall Street stocks dipped and major European indexes fell on Friday after Beijing issued its threat of additional tariffs.
Dow Jones industrial average and S&P 500 futures had been up slightly as investors awaited a speech by Jerome Powell, the Federal Reserve chair, on Friday that they hoped would clarify whether the central bank would cut interest rates again next month as has been widely expected.
But both indexes slid into negative territory at the start of trading after China’s government announced that it would retaliate against the Trump administration’s tariff plans.
European markets, which rose in early trading on Friday, also tumbled after the tariff announcement by the State Council Tariff Commission in Beijing. The Euro Stoxx 50, the CAC 40 in France and the Dax index in Frankfurt were all down about 0.4%. Bucking the trend, the FTSE 100 in London was up 0.1%.