President Trump hits China with $200 billion in new tariffs

President Donald Trump, emboldened by the United States’ economic strength and China’s slowdown, escalated his trade war Monday, saying the United States would impose tariffs on $200 billion worth of Chinese goods as punishment over Beijing’s trade practices.

The fresh round of tariffs comes on top of $50 billion worth of Chinese products taxed this year, meaning nearly half of all Chinese imports into the United States will soon face tariffs.

The new wave is scheduled to go into effect Sept. 24, with tariffs starting at 10 percent before climbing to 25 percent by the end of the year.

The timing will partially reduce the toll of price increases for holiday shoppers buying Chinese imports in the coming months.

The White House also said the United States was prepared to “immediately” place tariffs on another $267 billion worth of imports “if China takes retaliatory action against our farmers or other industries.”

The move is aimed at pressuring China to change long-standing trade practices that Trump says are hurting U.S. businesses at a moment when the administration believes it has an advantage in the trade dispute.

China’s economy is slowing, with consumers holding back and infrastructure spending dropping sharply. The Chinese slowdown is expected to worsen as the U.S. tariffs ramp up.

The United States, by contrast, has continued to experience robust economic growth, including the lowest unemployment rate since 2000.

White House officials said Monday that China could win relief from the tariffs by acceding to the administration’s trade demands, including allowing U.S. companies greater access to the China market and dropping its requirement that U.S. companies hand over valuable technology to Chinese partners. Officials said the United States would continue trade negotiations only if the Chinese were “serious” about giving ground on those issues.

But while the tariffs are aimed at hurting China, they could hamper the U.S. economy and bring pain for consumers.

Unlike the first round of tariffs, which were designed to minimize the impact on U.S. consumers, this wave could raise prices on everyday products including electronics, food, tools and housewares.

Retailers, manufacturers and a wide swath of other U.S. businesses have warned that the new tariffs could hurt their profits, hiring and growth.

The administration held six days of public hearings on the proposed $200 billion round of tariffs in August, which were dominated by companies warning that the United States no longer had the capacity to produce replacement products for the Chinese imports that would be hit by tariffs.

Economists warn the tariffs could chip away at economic growth in the United States. Morgan Stanley researchers estimate that the latest round could reduce economic growth in the United States this year by 0.1 percentage point, adding to another 0.1 percentage-point drag from tariffs currently in place. And the effects are likely to grow if China retaliates again, as it has threatened to do.

The administration did remove roughly 300 product lines - and some individual products - from the list after companies objected. Among the items dropped are smartwatches, Bluetooth devices, bike helmets, plastic gloves, high chairs, play pens and certain chemicals. But, in some cases, partial product lines will be taxed while other parts are not.

For example, high tech network routers and smartwatches share a product line, but under the U.S. trade representative plan, the routers would be subject to tariffs while watches are not.

Still, the tariffs will affect a significant swath of industries, driving up prices for materials and goods and requiring many industries to find new suppliers, raise prices or cut jobs, and business groups reacted swiftly and angrily to the announcement.

“It will be a lot of money coming into the coffers of the United States of America. A lot of money coming in,” Trump said during remarks at the White House on Monday.

He added that the United States cannot tolerate the trade gap between what it exports to China and what it imports from that country.

“We can’t do that anymore,” he said.

Trump’s decision is a significant escalation of an already serious trade dispute between the world’s two largest economies - one with seemingly no end in sight.

After months of failed trade talks, top officials from China and the United States were tentatively scheduled to talk this month in Washington. But it is unclear whether Beijing will agree to come to Washington with the new tariffs set to go into effect.