China announced Aug. 23 that it will hit back at the U.S. with additional import duties from the country in retaliation against U.S. President Donald Trump's announcement of new tariffs.
The country's State Council Tariff Commission will impose 5% to 10% of tariffs on about $75 billion of U.S. imports in two batches, effective Sept.1 and Dec. 15, paralleling with the dates set by the U.S. to impose latest tariffs on $300 billion of Chinese imports.
"In response to the measures by the [U.S.], China was forced to take countermeasures," the council said, according to CNBC.
The council prepared a list of 5,078 tax items, including crude oil, soybeans, cars and auto parts, on which tariffs are slated to be imposed. It would levy extra tariffs on 1,717 products under the list Sept. 1, and additional tariffs on the rest Dec. 15.
The move follows Trump's Aug. 1 announcement to impose 10% tariffs on $300 billion of Chinese imports. Washington, however, postponed the measures on some products and removed duties on a few other products, which it said was to avoid disruption during the Christmas holidays.
There are a variety of political factors at play that could continue the back-and-forth between the U.S. and China. How long this continues is up to the U.S. government, since the administration will have to decide whether striking a deal that is beneficial to the U.S. economy is better than playing hardball with China, said David Dollar, a senior fellow in the John L. Thornton China Center at the Brookings Institution in Washington.
Neither China nor the U.S. is likely to back down at the moment, given that both countries have political reasons for continuing to work toward signing a deal, according to William Reinsch, the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington. "Nobody believes this, but [the Chinese are] saying they're defenders of the trading system, they're the defenders of free trade, and it's Trump that is the great disrupter," he said in an interview. "Trump does not at this point want to pull out of the talks because that would be failure."
Reinsch said China and the U.S. are locked in an "uncomfortable embrace" that could push China to hold off agreeing to a potential trade deal, taking their chances with a different president if Trump is not reelected in 2020.
Meanwhile, Trump responded to China's action in a series of tweets that also rebuked the Federal Reserve. "As usual, the Fed did NOTHING! It is incredible that they can 'speak' without knowing or asking what I am doing, which will be announced shortly," Trump tweeted Aug. 23. "My only question is, who is our bigger enemy, [Federal Reserve Chairman] Jay Powell or Chairman Xi?"
Trump later said on Twitter that U.S. companies "are hereby ordered to immediately start looking for an alternative to China," and that mail and package carriers like the U.S. Postal Service, Amazon, FedEx and UPS need to search for and refuse shipments of Fentanyl from China.
The S&P 500 index was down 1.7% just before noon ET, shortly after the tweets, while Brent crude was trading 2% lower on the ICE Futures Exchange. The S&P 500 closed down 2.6%.
