President Donald Trump’s latest steps to slap tariffs on an additional $200 billion in Chinese goods led markets to tumble Wednesday morning and raised alarm among U.S. lawmakers and trading partners that an extended conflict could have wide-ranging economic consequences.
The Dow Jones Industrial Average opened more than 130 points lower and continued to fall in the early hours after Trump late Tuesday announced plans to impose 10 percent tariffs on thousands more Chinese products, drastically escalating the trade war between the world’s two largest economies. The broader Standard & Poor’s 500 index also slid about 0.6 percent.
Overseas, Beijing rejected the new tariff list as “totally unacceptable” and vowed to respond with counter-measures and an additional lawsuit at the World Trade Organization — the third it has brought against the United States this year.
In Brussels, a top European Commission official, Vice President Valdis Dombrovskis, said he was “concerned” about an “immediate economic impact” from not only the latest tensions but also about a broader unraveling of the multilateral trading system. Trump’s latest trade moves have also begun to unite other countries against the U.S.: Germany, for example, appears to be in the early stages of an tenuous economic alliance with China.
“As relations with the U.S. become increasingly difficult, the other economic giant will inevitably become more important to us,” said Volker Treier, the deputy chief executive of Germany’s Chambers of Industry and Commerce.
But Trump, for his part, showed no sign of reconciling with China. In tweets from Brussels, where he was meeting with NATO allies, the president blamed other nations’ policies for hurting U.S. agriculture, despite the fact that farm exports have grown in recent years.
“Farmers have done poorly for 15 years. Other countries’ trade barriers and tariffs have been destroying their businesses,” Trump wrote. “I am fighting for a level playing field for our farmers, and will win!”
The latest set of duties would not take effect until the end of August at the earliest, after the administration holds a public comment period on the affected products. They would, however, drastically escalate the pitched trade war.
The levies would come on top of 25 percent penalties on $34 billion in goods the Trump administration imposed last week and another set of tariffs on $16 billion in goods that are in the pipeline and could kick into effect as early as next month.
China retaliated in lockstep against the initial $34 billion — a move that directly led to Trump’s latest threat — and has pledged to do the same with the looming $16 billion.
But China imported only $130 billion worth of goods from the United States in 2017, while the U.S. imported $505 billion worth from China — making it impossible for them to keep up with the dollar-for-dollar if Trump moves forward with tariffs on the full $200 billion list. But Beijing could fight back with other measures to make life difficult for American companies doing business in China.
The latest duties are aimed at pressuring China to take U.S. concerns about intellectual property theft and forced technology transfers more seriously and finally change what the administration and many in industry and Congress see as harmful practices.
But even those who agree with the administration on its principles in cracking down on China are increasingly uneasy with the president’s inclination to impose tariffs on an ever-increasing number of products. Members of Congress pushed back Tuesday night and early Wednesday against what they saw as harmful penalties that would leave American farmers and consumers caught in the crossfire.
House Ways and Means Chairman Kevin Brady said that tensions could escalate into a multiyear trade conflict, He also called for Trump to sit down soon with Chinese President Xi Jinping to address their differences — a move that was then echoed by House Speaker Paul Ryan.
“I don’t want to hamstring the president’s negotiating tactics, but I have long said I don’t think tariffs are the right way to go,” Ryan said during a press conference Wednesday morning.
Rep. Dave Reichert added that he “strongly disagrees” with the tariff plans, which he said would lead to “higher prices here at home for American families and less sales abroad for American workers and farmers as markets are closed to American-made goods through retaliation.”
“I am committed to working with the administration to address China’s theft of American technology and intellectual property in a way that targets the problem and does not further harm communities across America,” added Reichert, who chairs the House Ways and Means Trade Subcommittee.
Some lawmakers have begun to explore ways to rein in the president’s authority to unilaterally impose tariffs. The Senate is set to hold a “test vote” Wednesday on legislation spearheaded by Sens. Bob Corker (R-Tenn.) and Pat Toomey (R-Pa.) that would require lawmakers to sign off on any tariffs imposed for national security reasons moving forward, as well as on any that took effect during the past two years.
The legislation, if passed, would not affect these tariffs against Beijing, but it would affect penalties in place on nearly all imports of steel and aluminum, including from China.
The preliminary vote — which will give an indication of how many and which lawmakers support taking action to limit the president’s authority at least over national security-related tariffs — is scheduled to take place at noon.
Jakob Hanke contributed to this report.