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New China tariffs to hit $75B in U.S. imports, including extra 25% car duty

BEIJING -- President Donald Trump late Friday said he would raise tariffs on Chinese imports as high as 30 percent in coming months after Beijing said it would place added tariffs on U.S. goods, including light vehicles.

Trump tweeted on Friday that tariffs on $250 billion of Chinese exports would go to 30 percent on Oct. 1, up from the current 25 percent. New tariffs set for Sept. 1 would increase to 15 percent from 10 percent.

"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," Trump said on Twitter. "As President, I can no longer allow this to happen!"

Early Friday, China said that it will impose additional tariffs on a total of $75 billion of U.S. goods in retaliation for Trump’s latest planned levies on Chinese imports, rattling automakers and raising fears of an extended trade battle between the two economic giants.

Some of China's countermeasures will take effect starting Sept. 1, while the rest will come into effect from Dec. 15, according to the announcement from the Ministry of Commerce. The new duties mirror an earlier timetable the U.S. laid out for 10 percent tariffs on nearly $300 billion of Chinese shipments.

An extra 5 percent tariff will be put on American soybeans and crude-oil imports starting next month, and a 25 percent duty on U.S. cars will resume Dec. 15, China said. 

Beijing earlier waived a 25 percent duty on light vehicles from the U.S. as part of efforts to restart trade talks between the two nations.

Among automakers, Ford Motor Co., Tesla Inc. and Germany’s Daimler and BMW Group are the most vulnerable to the additional levies. Ford exports the Lincoln MKC and Ford Explorer crossovers to China, among other vehicles. Jeep and Lexus also ship vehicles to China from U.S. plants.

BMW and Daimler export large numbers of utility vehicles from plants in the U.S. to China, while Tesla doesn’t yet make electric vehicles in the country. Six of the top ten vehicles exported from the U.S. to the world’s biggest car market are from the two German brands, according to forecaster LMC Automotive.

“The tit-for-tat tariffs, absent any meaningful negotiations, are damaging to the American auto industry," John Bozzella, who chairs the ad-hoc group "Here for America" that includes VW, Daimler and BMW, said in a statement.

"When these tariffs were initially imposed by China in 2017, American exports of finished vehicles dropped by 50 percent. We can’t let that happen to American workers again," added Bozzella, who also is CEO of the Association of Global Automakers, a trade group representing Toyota Motor Corp., Hyundai Motor Co., Nissan Motor Co. and other foreign-owned brands building vehicles in the U.S.

China imported 190,118 U.S.-made vehicles in 2018, a decline of 35 percent from 2017, according to data from the country's top vehicle importer, Sinomach Auto, citing trade tensions and tariff adjustments.

Ford, in a statement Friday, urged "the U.S. and China to find a near-term resolution on remaining issues through continued negotiations. It is essential for these two important economies to work together to advance balanced and fair trade." 

Earlier Friday, Trump fired off a series of tweets that blasted the country and signaled mounting frustration with the direction of trade negotiations.

“I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States,” Trump tweeted Friday.

The president laced into China, saying “We don’t need China” and that the U.S. would be “better off without them.” He also took aim at the Fed over what he has called its failure to lower interest rates to boost the economy and keep the dollar from becoming too strong, which weighs on exports.

Trump added that he “hereby ordered” American companies to start looking for alternatives to making products in China. It wasn’t immediately clear what Trump meant, as the president doesn’t have the legal authority to force such corporate decisions.

U.S. stocks closed down sharply Friday in response to Trump’s remarks and fears that an escalating trade war will further dampen global economic growth.

A meeting on trade took place around midday in the Oval Office, according to people familiar with the discussions. Trump is scheduled to leave late Friday for the G-7 summit in France, where trade tensions and their impact on the global economy are at the top of the agenda.

In addition to automakers, major business groups on Friday warned of the fallout from an extended trade war.

The U.S. Chamber of Commerce rebuffed Trump's call that U.S. businesses begin immediately looking for alternatives for operations in China.

"While we share the president’s frustration, we believe that continued, constructive engagement is the right way forward," Myron Brilliant, executive vice president and head of international affairs for the U.S. chamber, said in a statement. He urged both sides to quickly reach a trade deal. "Time is of the essence," Brilliant said. "We do not want to see a further deterioration of US-China relations."

The US-China Business Council said millions of U.S. citizens will be harmed by the increased trade tensions between the United States and China, the world's largest economies, following the latest salvos.

The group, which represents American companies doing business in China, urged Trump and Chinese leader Xi Jinping to end the downward cycle of tit-for-tat tariffs and focus on resolving their differences.

"A trade deal that addresses the legitimate concerns articulated by the (U.S. Trade Representative's office) in its Section 301 Report would be in the mutual interest of both China and the United States. Such a deal is within sight and should be pursued vigorously and as soon as possible," the group said.

The news from Beijing rekindled concerns about the outlook for global growth that’s already looking shaky. Emerging-market and commodity-related currencies also declined on Friday, while havens such as the yen and gold were supported.

The announcement comes as leaders from the Group of Seven nations prepare to meet in France and central bankers gather in Jackson Hole, Wyo., to discuss issues such as the global slowdown. The Chinese announcement was foreshadowed by a tweet from Hu Xijin, the editor-in-chief of the Global Times, a newspaper controlled by the ruling Communist Party.

China promised earlier this week that any new tariffs from the U.S. would lead to escalation and retaliation. The U.S. has said it will increase tariffs on some Chinese goods starting Sept. 1, although Trump has already delayed some of that increase amid economic turbulence.

After Trump gave the go-ahead earlier this month for 10 percent tariffs on the nearly $300 billion in Chinese imports that haven’t been hit by higher duties, China halted purchases of agricultural goods and allowed the yuan to weaken.

Negotiators have spoken by phone since then and are planning another call in coming days. People familiar with their intentions said earlier that the Chinese delegation is sticking to their plan to travel to the U.S. in September for face-to-face meetings, which may offer a chance for further reprieve.

The U.S. side is still hoping for that visit to happen, with Trump’s economic adviser Larry Kudlow telling Fox Business Network that “hopefully we are still planning on having the Chinese team come here to Washington D.C. to continue the negotiations.”

“I don’t want to predict, but we will see,” Kudlow said on Thursday in Washington.

Reuters contributed to this report.

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