President Donald Trump has instructed the United States Trade Representative (USTR) to consider implementing additional tariffs on Chinese goods worth $100 billion, just one day after China said it would introduce retaliatory duties on U.S. products worth $50 billion.
"In light of China's unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs," Trump said in a statement.
The announcement immediately sent further shock waves through financial markets. At the time of writing, the Dow Jones Industrial Average futures market was down 0.90%. The index ended the regular trading session higher, following speculation that the two countries would find a way to resolve their differences. Nasdaq and S&P 500 futures were also in the red.
In his statement, Trump also claimed that the U.S. remains willing to negotiate with China. "The United States is still prepared to have discussions in further support of our commitment to achieving free, fair, and reciprocal trade and to protect the technology and intellectual property of American companies and American people,” he added.
Shortly after Trump outlined his plans for new sanctions, U.S. Trade Representative Robert Lighthizer issued a statement, claiming that additional tariffs are subject to a 60-day public comment period. “No tariffs will go into effect until the respective process is complete,” he added.
China’s Commerce Ministry responded to Trump’s latest threat in a statement on Friday. The country reasserted that it doesn’t want a trade war and is willing to fight one “to the end, and at any cost.”
“This is starting to feel like the beginnings of a trade war, if simply each proposal is matched with a retaliation,” said Patrick Bennett, a Hong Kong-based strategist at Canadian Imperial Bank of Commerce, according to Bloomberg. “The U.S. risks isolating itself from global trade in this process and we think the U.S., USD and U.S. asset markets have more to lose.” (See also: US Futures Plunge After China Retaliates to Trump Tariffs.)
On Wednesday, China announced plans to introduce tariffs on 106 U.S. products, including soybeans, automobiles, chemicals, aircraft, whisky and cigars. The punitive measures were implemented after Trump, just 24 hours prior, proposed 25% tariffs on 1,300 industrial technology, transport and medical products. (See also: U.S. Stocks Could Be Hurt By Chinese Soy Tariffs.)