REUTERS/Kevin Lamarque
U.S. President Donald Trump and China's President Xi Jinping pose for a photo ahead of their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019
- President Donald Trump followed through with plans to slap tariffs on $112 billion worth of products from China on Sunday.
- The move significantly escalated a trade dispute that has cast uncertainty on the economy and led to retaliation against American businesses.
- Companies have warned the Trump administration the new tariffs would raise costs and disrupt supply chains.
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President Donald Trump followed through with plans to slap tariffs on $112 billion worth of products from China on Sunday, escalating a trade dispute that has cast uncertainty on the economy and led to retaliation against American businesses.
The 15% tariff covers far more consumer products than in previous rounds, including clothing, shoes and household electronics. China has said it would retaliate with punitive duties on thousands of American products including cars.
Sunday marked the first of two escalations the Trump administration announced in August. The US plans to enact tariffs on virtually all remaining imports from China on December 15, including particularly sensitive products such as laptops and cellphones. Trump has also said he would increase the tariff rate on $250 billion worth of products to 30% in October.
In public hearings held by the Office of the US Trade Representative in June, companies warned the Trump administration that the new tariffs would raise costs and disrupt supply chains.
"The mere threat that tariffs could be imposed on nearly all remaining imports from China has already accelerated a scramble among importers to find alternative sources of supply," said Bryan Wolfe, who represented Ascena Retail Group at the USTR hearings. "As a result, higher prices are already on the horizon for American families, regardless of the outcome of this investigation, or the products selected for coverage."
Getty Images/Alex Wong
U.S. President Donald Trump speaks to members of the media prior to his departure for Camp David August 30, 2019 at the White House in Washington, DC.
Even with mounting evidence that those costs fall onto American businesses and consumers, the Trump administration has said the dispute is necessary to force fairer trade policies from China. But officials have struggled to win concessions on issues raised in a Section 301 investigation last year, such as intellectual property theft and the forced transfer of foreign technology.
Still, the president has swung between doubling down on trade threats and appearing optimistic toward a deal with China in recent weeks. After plans for the latest escalations jolted financial markets last month, he delayed one stage of tariffs until after the holiday shopping season.
Businesses and investors have grown increasingly concerned that a prolonged trade war could upend the longest expansion in history, with a key recession signal flashing for the first time in more than a decade in mid-August.