Trump announces increased tariffs on Chinese goods

President TrumpDonald John TrumpTrump says he will 'temporarily hold off' on declaring Mexican drug cartels as terror organization House Judiciary Committee formally receives impeachment report Artist behind gold toilet offered to Trump sells banana duct-taped to a wall for 0,000 MORE on Friday announced plans to increase tariffs on hundreds of billions of dollars in Chinese goods in a sweeping response to duties announced by Beijing earlier in the day.

Trump tweeted that a 10 percent tariff on $300 billion in Chinese goods set to go into effect on Sept. 1 would increase to 15 percent, and that an additional $250 billion being tariffed at 25 percent will be hit with a 30 percent tariff starting Oct. 1.

"China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!)" Trump tweeted.

ADVERTISEMENT

The move marks the latest salvo in Trump's trade war with China, which has dragged on for more than a year with few signs of a resolution in sight.

Beijing announced early Friday that it would levy $75 billion in tariffs on American-made goods that include cars and farm products. The latter would likely cause further financial harm to U.S. farmers who have already borne the brunt of the trade war with China.

Trump lashed out hours later, calling Chinese President Xi Jinping an "enemy" and tweeting that U.S. companies should seek "an alternative" to doing business in China.

The president does not have the authority to dictate the actions of private businesses, but the tweets rattled investors and triggered a mass sell-off on the stock market. The Dow Jones industrial average closed with a loss of 2.4 percent, a 623-point drop, while the Nasdaq composite and S&P 500 ended Friday down 3 percent and 2.6 percent respectively.

Trump earlier this month said he would impose a 10 percent tariff on an additional $300 billion in Chinese goods amid stagnant negotiations. But the president pulled back last week, announcing it would delay tariffs on certain consumer goods from China until mid-December.

Trump has routinely denied that his tariffs would have any effect on U.S. consumers, but admitted that the delay of certain tariffs was meant to prevent Americans from paying higher prices for holiday gifts.

The escalation of the U.S.-China trade war comes amid rising fears of a global recession, driven in part by the mounting costs of Trump's trade battles. U.S. business investment, exports and manufacturing have all retracted as firms hold off on expanding with an uncertain and chaotic economic climate.

The U.S. economy has remained strong overall during Trump's trade war, sustaining unemployment near record lows, steady growth, rising wages and booming consumer spending. But the rising costs of Trump's tariffs and Chinese retaliation threaten to derail a record-long stretch of U.S. prosperity.

Trump has dismissed fears of a recession and the harm of trade war, instead blaming the Federal Reserve and its chairman, Jerome Powell, for hindering the economy. His feud with Powell reached new heights Friday after the Fed chairman warned that the central bank is not responsible for resolving the trade disputes driven by Trump.

“Setting trade policy is the business of Congress and the administration, not that of the Fed,” Powell said at the Fed’s annual summit in Jackson Hole, Wyo.

He argued that while “monetary policy is a powerful tool that works to support consumer spending, business investment and public confidence, it cannot provide a settled rulebook for international trade.”

Trump shot back on Twitter that Powell, who he appointed to lead the Fed, could be a bigger threat to the U.S. than President Xi Jinping of China.

Updated at 5:35 p.m.

"We have a very strong dollar and a very weak Fed. I will work 'brilliantly' with both, and the U.S. will do great," Trump tweeted. "My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?"