Bloodbath after Trump’s China demand
Donald Trump launched a tirade on Twitter today, declaring that China has "been taking advantage of the United States".
The US President ordered that he would increase taxes on products from China to 30 per cent from October 1.
Mr Trump's tweet storm came as Wall Street tumbled after the US-China trade war escalated in dramatic fashion, with Trump demanding American companies seek alternatives to doing business with China after Beijing announced its own slate of retaliatory measures.
All three major US stock indexes ended the session sharply lower, posting their fourth consecutive weekly declines.
For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight....— Donald J. Trump (@realDonaldTrump) August 23, 2019
....Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very....— Donald J. Trump (@realDonaldTrump) August 23, 2019
Mr Trump said products coming from China that were slated to be hit with a 10 per cent tariff on September 1 will now face a 15 per cent tariff. He announced that goods and products currently being taxed at 25 per cent will be taxed at 30 per cent from October.
Trump's comments come after China said it would pursue new tariffs of 5 per cent and 10 per cent on $US75 billion of American products.
The tariffs would take place in two steps, just as the US said it would do earlier this month in imposing 10 per cent tariffs on $US300 billion of Chinese goods.
The rising tensions between the world's two biggest economies unnerved investors already on edge.
The latest exchanges in the long-running tariff row triggered a broadbased sell-off that hit shares of companies with high exposure to China the hardest, such as chipmakers and other top technology names.
Dow Jones Industrials components Intel and Apple dropped 3.9 per cent and 4.6 per cent respectively.
The developments overshadowed a highly anticipated speech from US Federal Reserve Chair Jerome Powell, in which he reiterated a pledge the central bank would "act as appropriate" to support the economy.
...unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%...— Donald J. Trump (@realDonaldTrump) August 23, 2019
...Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!— Donald J. Trump (@realDonaldTrump) August 23, 2019
Powell stopped short of committing to the series of rapid-fire rate cuts Trump has been demanding.
Trump's tweeted response to the speech labelled Powell an "enemy". David Katz, chief investment officer at Matrix Asset Advisers in New York, said the president was clearly upset.
"(Trump) seems to be irate that China reacted to what the US has done and is basically having a mini-tantrum and is angry at everybody," he said. "He's angry at China, he's trying to put the blame on the market and the economy on Powell.
TRUMP: 'WE DON'T NEED CHINA'
The dramatic fallout on Wall Street came as Trump "ordered" American companies to find alternatives to doing business in China.
The Dow Jones Industrial Average plummeted more than 700 points, or about 2.7 per cent, directly after Trump launched into a Twitter tirade lambasting China for intellectual property theft and fentanyl shipments to the US, the New York Post reports.
The Dow Jones ended trading down 622 points, or 2.4 per cent.
Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far....— Donald J. Trump (@realDonaldTrump) August 23, 2019
"We don't need China and, frankly, would be far … better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP." Trump said in a series of earlier tweets.
"Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA," Trump said.
Both the S&P 500 and Nasdaq joined in the bloodbath, closing down 2.5 per cent and 3 per cent respectively.
Mr Trump also directed Fed-Ex, Amazon, UPS and the US Post Office to "search for & refuse" fentanyl shipments from China and other countries.
Shares of Amazon dropped 1.9 per cent while FedEx and UPS shares were off 2.6 per cent and 2.4 per cent, respectively, as of 11:35am.
Apple, which makes many of its products in China, dropped 3.8 per cent to $US204.2 ($A302) a share.
Mr Trump's remarks came following China announcing that it plans to impose $US75 billion ($A111.1 billion) of tariffs on US goods, including agricultural products and small aircraft as well as resume tariffs on US autos. The tariffs are set to go into effect in two stages on September 1 and December 15, mimicking the schedule the US plans for instituting tariffs on Chinese goods.
Mr Trump said he will be responding to China's tariffs this afternoon.
CHINA HITS BACK IN US TARIFFS WAR
China announced tariff hikes on $US75 billion ($A111.1 billion) of US
products in retaliation for Mr Trump's latest planned increase, deepening a conflict over trade and technology that threatens to tip a weakening global economy into recession.
China also will increase import duties on US-made autos and auto parts, the Finance Ministry announced.
The announcement came as leaders of the Group of 7 major economies prepare to meet in France this weekend.
Tariffs of 10 per cent and 5 per cent will take effect on two batches of goods on September 1 and December 15, the ministry said in a statement.
It gave no details of what goods would be affected but the timing matches Mr Trump's planned duty hikes.
Washington is pressing Beijing to narrow its trade surplus and roll back plans for government-led creation of global competitors in robotics, electric cars and other technology industries.
The spiralling conflict has battered exporters on both sides and fuelled concern it might drag down weakening global economic growth.
China's government appealed to Mr Trump this week to compromise in order to reach a settlement.
That came after Mr Trump warned that the American public might need to endure economic pain in order to achieve long-term results.
The United States, Europe, Japan and other trading partners say Beijing's development plans violate its market-opening commitments and are based on stealing or pressuring foreign companies to hand over technology.
Some American officials worry they might erode US industrial leadership.
Chinese leaders have offered to alter details but are resisting giving up a development strategy they see as a path to prosperity and global influence.
The talks are deadlocked over how to enforce any deal.
China insists Trump's punitive tariffs have to be lifted as soon as an agreement takes effect. Washington says at least some have to stay to ensure Beijing carries out any promises it makes.
Trump announced plans to raise tariffs September 1 on $US300 billion ($444.6 billion) of Chinese products after talks broke down in May. Increases on some goods were postponed to December 15.
Trump escalated "trade frictions" that are "seriously threatening the multilateral trading system," the Finance Ministry said. "China was forced to take countermeasures."
A separate statement said tariffs of 25 per cent and 5 per cent would be imposed on US-made autos and auto parts on December 15.
Beijing announced that increase last year but suspended it after Trump and his Chinese counterpart, President Xi Jinping, agreed at a meeting in December in Argentina to put off further trade action while they negotiated.
Trump and XI agreed in June to resume negotiations. But talks in Shanghai in July ended with no indication of progress. Negotiators talked by phone this month and are due to meet again in Washington next month.
Trump already has imposed 25 per cent tariffs on $250 billion ($370.5 billion) of Chinese products.
Beijing retaliated by imposing its own penalties on $110 billion ($A163 billion) of American goods. But their lopsided trade balance meant China was running out of imports for retaliation.
Friday's announcement, if it applied to goods not already affected by Chinese penalties, would extend tariff hikes to everything China imports from the United States. That would match Trump's hikes, which cover almost all of what Americans buy from China.