U.S. President Donald Trump has indicated that he’s willing to hit every product imported from China with tariffs, sending U.S. markets sliding before the opening bell Friday.
In a taped interview with the business channel CNBC, Trump said “I’m willing to go to 500,” referring roughly to the $505.5 billion in goods imported last year from China.
The administration to date has slapped tariffs on $34 billion of Chinese goods in a trade dispute over what it calls the nation’s predatory practices.
Dow futures which had already been pointing modestly lower slid sharply after the comments were aired by CNBC early Friday, indicating triple-digit losses when the market opens.
The yuan dipped to a 12-month low of 6.8 to the dollar, off by 7.6 per cent since mid-February.
China has retaliated with duties of its own, hitting U.S. imports of soybeans and pork. The administration July 10 announced a second possible round targeting $200 billion worth of goods. Beijing vowed “firm and forceful measures” in response.
Beijing is targeting sectors, like agriculture, that could harm Trump politically at home, though he said in the CNBC interview that he is seeking to do only what is fair.
“I’m not doing this for politics, I’m doing this to do the right thing for our country,” Trump said. “We have been ripped off by China for a long time.”
There is already pushback in the U.S. from businesses that will take a hit in an escalating trade war.
Trump has ordered Commerce to investigate whether auto imports pose a threat to U.S. national security that would justify tariffs or other trade restrictions. Earlier this year, he used national security as a justification for taxing imported steel and aluminum.
Auto tariffs would escalate global trade tension dramatically: The U.S. last year imported $192 billion in vehicles and $143 billion in auto parts – figures that dwarf last year’s $29 billion in steel and $23 billion in aluminum imports.
In the same interview, taped Thursday at the White House, Trump broke with a long-standing tradition at the White House and voiced displeasure about recent actions at the U.S. Federal Reserve. Both political and economic officials believe that the central bank needs to operate free of political pressure from the White House or elsewhere to properly manage interest rate policy.
Last month, the Fed raised its benchmark rate for a second time this year and projected two more increases in 2018. Its rate hikes are meant to prevent the economy from overheating and igniting high inflation. But rate increases also make borrowing costlier for households and companies and can weaken the pace of growth. In particular, the Fed’s most recent rate hikes could dilute some of the benefit of the tax cuts Trump signed into law last year.