President Trump said Tuesday that China’s economic exploitation of the U.S. left him with “no choice” but to hit Beijing with tariffs, while the Chinese government warned that it will retaliate for Mr. Trump’s “irrational” move, and stock markets plummeted on fresh fears of a trade war.
A day after Mr. Trump announced he was drawing up a list of possible tariffs on $200 billion worth of Chinese goods, the president told small-business owners that he seeks a level playing field for them to compete internationally.
“It’s time, folks,” Mr. Trump said. “We have no choice. China has been taking out $500 billion a year out of our country and rebuilding China.”
China, which has been retaliating with its own tariff threats, warned that the only loser in the trade fight will be the U.S. economy.
“If the U.S. becomes irrational and issues this list, China will have no choice but to adopt strong countermeasures of the same amount and quality,” the Chinese Commerce Ministry said. It called Mr. Trump’s tariff threat an “act of extreme pressure and blackmail” that “deviates from the consensus reached by both parties after many negotiations, and is a disappointment to the international community.”
Although Mr. Trump’s audience applauded his comments on tariffs at the annual National Federation of Independent Business conference, the renewed trade hostilities between Washington and Beijing are spooking many sectors of the U.S. economy, from Wall Street to the agricultural heartland.
With the trade feud escalating and no further talks scheduled between the two governments, stocks dropped sharply Tuesday. The Dow Jones industrial average fell 287.26 points, or 1.15 percent, to close at 24,700.21.
Shares of large U.S. companies with significant overseas business were hit especially hard. Boeing’s stock shed 3.6 percent, Caterpillar 3.7 percent and GE 1.7 percent.
The Business Roundtable, representing companies with more than $7 trillion in annual revenue, said the administration’s feud with China “will only make it harder to achieve a fair and level playing field for American companies to compete in China.”
“Risking a trade war with more tariffs will only invite more retaliation that will cause significant harm to the U.S. economy,” said the group, urging the administration instead to “work with our allies and place coordinated pressure on China to end their harmful trade and investment practices.”
The president earlier ordered 25 percent tariffs on $50 billion in Chinese goods as punishment for Beijing’s forced transfer of U.S. technology on companies doing business in China, and for intellectual property theft. China responded with the threat of a penalty of the same size on U.S. exports, prompting Mr. Trump to order U.S. Trade Representative Robert Lighthizer to target another $200 billion in Chinese goods for 10 percent tariffs.
The president said the penalties will go into effect “if China refuses to change its practices” and proceeds with its plans for retaliatory tariffs.
Combined, the potential tariffs on Beijing could reach $450 billion — an amount equal to 89 percent of Chinese goods imported to the U.S. last year.
Neither side has yet imposed tariffs on the other in their growing dispute over technology and the U.S. trade gap. The first round is to take effect on July 6. But the rhetoric is intensifying after several rounds of high-level trade talks that White House economic adviser Peter Navarro said yielded no progress.
“None of these efforts by the president and his team have resulted in any progress on the two core issues facing the U.S.-China relationship,” Mr. Navarro told reporters, citing the trade imbalance and China’s campaign to acquire U.S. technology “by any means necessary.”
“The actions President Trump has taken are purely defensive in nature,” he said, asserting that “China does have much more to lose” because it sells so much more to the U.S. than it buys.
Despite investors’ jitters over the rising trade rhetoric, Mr. Navarro said the president’s action will be “ultimately bullish” for corporate America and U.S. workers.
“I understand that there’s going to be concern about what the impact might be, both on the financial markets and on the global economy,” he said. “This trade dispute will lead to relatively small effects in two economies that collectively add up to about $30 trillion in annual GDP. Our view is that these actions are necessary to defend this country. This is a trade dispute — nothing more, nothing less.”
Mr. Navarro said China is seeking by 2025 to control 70 percent of U.S. industries such as aerospace, agricultural machinery, artificial intelligence, biotech, business application software, electronics, new generation IT, precision farming, robotics, and satellite communications.
“China cannot have 70 percent of production of these industries by 2025,” he said.
⦁ Dan Boylan contributed to this article, which is based in part on wire service reports.
• Dave Boyer can be reached at dboyer@washingtontimes.com.
Please read our comment policy before commenting.