The president of the United States of America, Donald Trump has announced plans to hike the tariff imposed on $200bn of Chinese goods from 10% to 25% on Friday, a move which would escalate a trade war between China and the US.
Trump announced the move on Twitter, complaining that negotiations between the two countries were proceeding too slowly.
The move will affect more than 5,000 products made by Chinese farms and factories, from fresh and frozen food to chemicals, textiles, metal work, building materials, electronics and consumer goods.
The US president also threatened to impose tariffs on all Chinese trade with America, a move that could further destabilize relations between the two economic powers.
The move prompted sharp falls in stocks in Asia Pacific on Monday with China’s blue chip stock index dropping 4% – its biggest fall for two months – while the Hang Seng fell 2.5%.
A 10% tariff was imposed on these goods last September in order to cut America’s trade deficit with China and force concessions on issues such as intellectual property rights.
It had been scheduled to jump to 25% in January but the president held back while talks between the two sides continued.
Currently, almost half of China’s sales to America are affected by tariffs and Trump is now aiming for the remaining $325bn.
In a statement, Trump warned that, “325 Billion Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”
Such a move could cause further pain and disruption to the Chinese economy, and probably trigger retaliatory action by Beijing.