Trump says US will hit China with new round of tariffs next month

President TrumpDonald John TrumpTrump conversation with foreign leader part of complaint that led to standoff between intel chief, Congress: report Pelosi: Lewandowski should have been held in contempt 'right then and there' Trump to withdraw FEMA chief nominee: report MORE on Thursday threatened to impose new tariffs on virtually all remaining Chinese imports starting next month, ratcheting up the U.S. trade war with China following a brief ceasefire. 

Trump tweeted that the U.S. would place a 10 percent tariff on $300 billion in Chinese goods beginning on Sept. 1 while “trade talks are continuing.” The president later said the tariff rate could increase to as much as 25 percent, depending on whether the two sides strike a deal.

“I could always do more or I could do less,” he said.

That import penalty, combined with the existing 25 percent tariff on $250 billion in Chinese goods, would cover almost all products the U.S. brings in from China. It marks the biggest escalation yet in Trump’s long-running trade dispute with China and ended a tariff truce brokered than two months ago. 

Trump’s unexpected announcement showed he is unhappy with the progress made in recent trade talks between U.S. and Chinese envoys in Shanghai. The talks broke up on Wednesday without making significant progress toward a trade deal and Trump was briefed on the outcome at the White House on Thursday before he announced the tariffs, according to an administration official.

The White House issued a statement on Wednesday that called the talks with China “constructive” and said they would continue in early September. While officials reported no progress on major sticking points in the trading relationship, they also did not signal a tariff escalation.

But Trump on Thursday voiced frustration that China has not yet purchased “large quantities” of U.S. agricultural goods nor cracked down on the flow of the drug fentanyl into the country, pledges China made in previous rounds of talks that Trump claimed as victories.

“I think he wants to make a deal but, frankly, he’s not going fast enough,” Trump said of Chinese President Xi Jinping.

The president’s tariff threat rattled financial markets. The Dow Jones Industrial Average fell more than 280 points on the news and the S&P 500 dropped by around 0.9 percent. Trump said he was “not concerned at all” about the market’s reaction.

“I expected that a little bit,” he said.

The business community reacted angrily to the announcement, after having urged the administration to end the trade war they believe has hampered the U.S. economy.

“These additional tariffs will only threaten U.S. jobs and raise costs for American families on everyday goods,” said David French, senior vice president for government relations at the National Retail Federation. “The tariffs imposed over the past year haven’t worked, and there’s no evidence another tax increase on American businesses and consumers will yield new results.”

Many lawmakers and economic observers have argued the tariffs will raise the cost of consumer goods, which could slow the U.S. economy in the midst of Trump’s 2020 reelection race. A draft list published in May of tariff targets included laptops, cellphones, clothing, shoes and baby formula. The final list has not been set, but Trump has previously said consumer electronics giant Apple, Inc. will not receive an exemption.

Gary CohnGary David CohnTrump says US will hit China with new round of tariffs next month Gary Cohn bemoans 'dramatic impact' of Trump tariffs Press: Acosta, latest to walk the plank MORE, Trump’s former top economic adviser, said Thursday the trade war had already had a “dramatic impact” on the U.S. manufacturing sector by driving up costs.

“I think everyone loses in a trade war. We are an 80 percent service economy,” Cohn told BBC. “The service side of the economy is doing very well, because, guess what, it’s not being tariffed.”

But Trump has repeatedly said he is comfortable leaving tariffs on China in place, saying Thursday that “we’re taking in many billions of dollars” in tariff revenue. That money, however, is almost always paid by U.S. importers, which often pass the cost down to consumers.

This week’s trade talks marked the first in-person negotiating session between the two sides since last May, when they collapsed after the U.S. accused China of backing away from key concessions. Trump and Xi agreed during a June meeting at the Group of 20 summit to resume talks and hold off on additional tariff increases.

Updated: 4:56 p.m.