President Donald Trump brought the world's two biggest economies to the brink of a trade war Friday by announcing a 25 percent tariff on up to $50 billion in Chinese imports to take effect July 6.
Beijing quickly responded that it would retaliate with penalties of the same scale on American goods — and it spelled out details to impose tariffs on 545 U.S. exports, including farm products, autos and seafood, according to the Xinhua state news agency.
In announcing the U.S. tariffs, Trump said he was fulfilling a campaign pledge to crack down on what he contends are China's unfair trade practices and its efforts to undermine U.S. technology and intellectual property.
"We have the great brain power in Silicon Valley, and China and others steal those secrets," Trump said on "Fox & Friends." ''We're going to protect those secrets. Those are crown jewels for this country."
Trump Supporter Storms Media Pen at Texas Rally
The prospect of a U.S.-China trade war weighed on financial markets Friday. The Dow Jones industrial average was down more than 220 points in mid-afternoon trading before recovering somewhat to finish down 84 points. Other stock averages also declined.
The U.S. tariffs will cover 1,102 Chinese product lines worth about $50 billion a year. Included are 818 items, worth $34 billion a year, from a list of 1,333 the administration had released in April. After receiving public comment, the U.S. removed 515 product lines from the list, including TVs and some pharmaceuticals, according to a senior administration official who briefed reporters on condition of anonymity.
The administration is targeting an additional 284 Chinese products, which it says benefit from Beijing's strong-armed industrial policies, worth $16 billion a year. But it won't impose those tariffs until it gathers public comments. U.S. companies that rely on the targeted imports — and can't find substitutes — can apply for exemptions from the tariffs.
The Trump administration has sought to protect consumers from a direct impact from the tariffs, which amount to a tax on imports. The tariffs target mainly Chinese industrial machinery, aerospace parts and communications technology, while sparing such consumer goods as smartphones, TVs, toys and clothes that Americans purchase by the truckload from China.
These tariffs will impose higher costs on U.S. companies that use the equipment. And over time, those costs could be passed on to consumers. But the impact won't be as visible as it would be if consumer products were taxed directly.
By contrast, the Trump administration earlier this year imposed steep tariffs on imported washing machines. By May, the cost of laundry equipment had jumped 17 percent from two months earlier, according to government data.
The administration characterized the tariffs it announced Friday as entirely proper.
"It's thorough, it's moderate, it's appropriate," U.S. Trade Rep. Robert Lighthizer said on Fox Business Network's "Mornings With Maria."
Lighthizer added, "Our hope is that it doesn't lead to a rash reaction from China."
But Beijing's Commerce Ministry retorted: "The Chinese side doesn't want to fight a trade war, but facing the shortsightedness of the U.S. side, China has to fight back strongly. We will immediately introduce the same scale and equal taxation measures, and all economic and trade achievements reached by the two sides will be invalidated."
China fired back Saturday in a spiraling trade dispute with President Donald Trump by raising import duties on a $34 billion list of American goods including soybeans, electric cars and whiskey.
The ministry said also was scrapping deals to narrow Beijing's multibillion-dollar trade surplus with the United States by purchasing more American farm goods, natural gas and other products.
Beijing will impose an additional 25 percent tariff starting July 6 on 545 products from the United States including soybeans, electric cars, orange juice, whiskey, salmon and cigars, according to the Ministry of Finance.
Most are food and other farm goods, hitting Trump's rural supporters hardest. Beijing appeared to be trying to minimize the impact on its own economy by picking U.S. products that can be replaced by imports from other suppliers such as Brazil or Australia.
Chinese regulators also are considering a tariff hike on an additional 114 products including medical equipment and energy products, the Finance Ministry said. It said a decision would be announced later.
Trump has already imposed tariffs on steel and aluminum imports from Canada, Mexico and European allies, sparking anger and retaliatory threats from some of America's closest longtime allies. But his proposed tariffs against China risk igniting a damaging trade war involving the world's two biggest economies.
Trump's decision follows his summit with North Korean leader Kim Jong Un. The president has coordinated closely with China on efforts to pressure Pyongyang to eliminate its nuclear arsenal. But he signaled that whatever the implications for that or other issues, "I have to do what I have to do" to address China's trade policies.
By June 30, the administration is expected to finish writing rules to restrict China's ability to invest in U.S. technology.
Shutdown Deal Offers No Money for Concrete Wall
Most of all, the U.S. tariffs are a response to China's attempts to supplant U.S. technological dominance, including outright theft of trade secrets and its requirement that U.S. companies share technology in exchange for access to the Chinese market.
The Trump administration has also argued that Beijing subsidies favored industries, encouraging them to overinvest and overproduce. The result: China has flooded world markets in steel, aluminum, solar panels and products, thereby undercutting prices and putting foreign rivals out of business.
Wall Street has viewed the trade tensions with concern, fearful that they could strangle economic growth and undermine the benefits of the tax cuts Trump signed into law last year.
"Imposing tariffs places the cost of China's unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers, and ranchers," said Thomas Donohue, president of the U.S. Chamber of Commerce.
But Steve Bannon, Trump's former White House and campaign adviser, said the crackdown on China's trade practices was "the central part of Trump's economic nationalist message. His fundamental commitment to the 'deplorables' on the campaign trail was that he was going to bring manufacturing jobs back, particularly from Asia."
In the trade fight, Bannon said, Trump has converted three major tools that "the American elites considered off the table" — namely, the use of tariffs, the technology investigation of China and penalties on Chinese telecom giant ZTE."
Border Fund Negotiations Stall Days to Second Deadline
Political reactions to Friday's announced tariffs cut across party lines. Senate Minority Leader Chuck Schumer, D-N.Y., said Trump was "right on target."
"China is our real trade enemy, and their theft of intellectual property and their refusal to let our companies compete fairly threatens millions of future American jobs," Schumer added.
But Rep. Dave Reichert, R-Wash., said he disagreed with the action because "Americans will bear the brunt instead of China."
AP Writers Christopher Rugaber, Kevin Freking, Martin Crutsinger and Alexandra Olson contributed to this report.