WASHINGTON -- President Donald Trump said Sunday that he will increase tariffs on Chinese imports on Friday and impose levies on hundreds of billions of dollars of additional imports "shortly."
The unexpected announcement sets what appears to be a new deadline to force China to agree to a final trade deal as soon as this week or trigger an escalation of the U.S.-China trade war.
Just days before Chinese negotiators are scheduled to arrive in Washington, the president threatened to increase tariffs on $200 billion worth of Chinese goods from 10% to 25% on Friday and soon levy a new 25% fee on all remaining Chinese imports -- about $325 billion worth, Trump said.
Global stock markets fell on the news. Futures for rhe Dow Jones industrial average lost 1.9%. The Shanghai Composite index plunged 4.9%, while the Hang Seng in Hong Kong sank 3.5%. Japan's markets were closed for a holiday.
In a pair of tweets, Trump accused China of trying to "renegotiate" the terms of an agreement that negotiators have been working to finish for five months. Trump has complained about Chinese trade practices and the chronic U.S. trade deficit with China, and had twice pushed back deadlines -- in January and March -- to raise the tariffs in a bid to buy more time for a negotiated settlement.
"The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!" the president tweeted shortly after noon on Sunday.
National Economic Council Director Larry Kudlow acknowledged Sunday that there are costs to American farmers and consumers when tariffs are imposed, but he maintained that the administration has taken action to help on that front.
He said that by announcing the tariff increase, Trump was "issuing a warning" to China.
"I'm a free-trade guy. The president's tariffs, however, have been extremely useful in negotiating. ... If it doesn't work out, then I think what the president is saying in today's tweet is that we will continue these tariffs," Kudlow said during an appearance on Fox News Channel.
He also said that "structural issues and enforcement issues remain" when it comes to China's trade practices.
"China has got to end its unfair, nonreciprocal trading system. They're breaking the laws," he said.
The office of the U.S. trade representative, Robert Lighthizer, had no immediate response to a request for comment.
It remains to be seen how the Chinese will respond to Trump's announcement. The Wall Street Journal, citing unidentified sources, said China's government was considering canceling this week's talks.
Philip Levy, senior fellow at the Chicago Council on Global Affairs and a White House economist under President George W. Bush, said the talks with China are too complicated for Trump's tactics to work.
"The president treats this like we're haggling over the price of a used car," Levy said.
TARIFFS TOUTED
The president said Sunday on Twitter that "for 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results."
Trump also said on Sunday that his tariffs have had little impact on product costs in the United States and have been "mostly borne by China."
American importers pay import levies. A March study by economists from the Federal Reserve Bank of New York, Columbia University, and Princeton University found that the burden of Trump's tariffs -- including taxes on steel, aluminum, solar panels, and Chinese imports -- falls entirely on U.S. consumers and businesses who buy imported products.
By the end of last year, the study found, Americans were paying $3 billion a month in higher taxes and absorbing $1.4 billion a month in lost efficiency.
But supporters of the tariffs argue that higher-priced imports make similar American products more competitive. In any case, the overall U.S. economy has remained healthy. On Friday, the government reported that the U.S. unemployment rate had fallen to the lowest level in half a century.
Until the president's tweets, recent administration statements about prospects for a deal had been optimistic. Last month, Trump said the two sides were on the verge of an "epic" and "monumental" deal that would address all of his complaints about Chinese trade practices.
Treasury Secretary Steven Mnuchin traveled to Beijing last week, and he said talks there were "productive" and in their "final laps" -- but he also suggested that Washington was willing to "move on" if it can't get the deal it wants.
The U.S. goals for the deal include opening up business opportunities in China for American companies, requiring China to buy more American goods, and ending the Chinese practice of forcing American firms to hand over valuable technology and trade secrets as a condition of doing business there.
However, China's demand that the United States roll back all or most of Trump's tariffs has proven to be a sticking point. The United States wants the tariffs to come off slowly, as China meets certain benchmarks, and the U.S. may keep tariffs on $50 billion worth of goods in place indefinitely.
Under the Trump administration, the United States ramped up tariffs on roughly half of its imports from China last year, while China retaliated with tariffs on more than 70% of its imports from the United States, according to tracking by Chad Bown, a senior fellow at the Peterson Institute for International Economics.
American businesses say they support the administration's efforts to press for a more level playing field in China, but they also complain that the tariffs have stung, said Tim Stratford, the chairman of the American Chamber of Commerce in China.
"Nobody in the business community likes the tariffs," he said. "They hurt the people that impose them just as much as people they are imposed on."
Information for this article was contributed by David J. Lynch, Felicia Sonmez and Damien Paletta of The Washington Post; by Paul Wiseman and Joseph Pisani of The Associated Press; by Ana Swanson of The New York Times; and by Nathan Crooks and Mark Niquette of Bloomberg News.
A Section on 05/06/2019