By William Mauldin and Alex Leary in Washington and Chao Deng in Beijing
President Trump said he would raise tariffs on Chinese imports
as high as 30% in coming months after Beijing said it would place
added tariffs on U.S. goods, the latest escalation in a trade war
that showed anew its potency to rattle investors, confound central
bankers and cloud the global economy.
Mr. Trump tweeted on Friday that tariffs on $250 billion of
Chinese exports would go to 30% on Oct. 1 up from the current 25%.
New tariffs set for Sept. 1 would increase to 15% from 10%.
The president also said he was ordering U.S. companies doing
business in China to explore relocating their operations after
Beijing earlier in the day unveiled new tariffs on U.S. goods.
"We don't need China and, frankly, would be far better off
without them, " Mr. Trump tweeted mid-morning Friday after Beijing
said it would place added tariffs of 5% and 10% on $75 billion of
U.S. imports, phased in from Sept. 1. "Our great American companies
are hereby ordered to immediately start looking for an alternative
to China, including bringing your companies HOME."
He said he would announce further action later Friday and the
White House said he met with top trade officials in the Oval
Office.
It was far from clear what authority Mr. Trump could use to
force companies to seek alternatives to Chinese supply chains,
something some have been trying to do already -- with mixed results
-- as trade tensions have escalated.
"I think that's typical Trump, kind of over the top. He can't
order anybody and he knows that," said Sen. Lindsey Graham (R.,
S.C.), a close ally of the president who said he spoke with Mr.
Trump about China on Thursday night. "I think he's pushing as hard
as he can to get the Chinese to take what we're doing
seriously."
The president's stance represented a new phase in his
longstanding drive to shape U.S. corporate planning to align with
his desire to see U.S. companies invest domestically and to force
changes in China's behavior that he says harms U.S. companies and
consumers.
The uncertainty created by that strategy has posed continuous
challenges to stewards of monetary policy, with Federal Reserve
Chairman Jerome Powell saying Friday morning in a much anticipated
speech that the Fed stood ready to stimulate the economy as needed
but that trade uncertainties compounded the risks to the global
economic outlook.
"While monetary policy is a powerful tool that works to support
consumer spending, business investment and public confidence, it
cannot provide a settled rulebook for international trade," Mr.
Powell said at the annual central bankers' conclave in Jackson
Hole, Wyo.
Markets broadly held up following China's tariff announcement
and Mr. Powell's speech but reacted negatively to Mr. Trump's
Twitter proclamations with the Dow Jones Industrial Average
dropping more than 600 points, yields on U.S. government bonds
tumbling and many commodities prices falling.
Mr. Powell, a frequent target of Mr. Trump who wants him to do
more to lower rates to stimulate growth, was once again in the
presidential cross-hairs after he stopped short of committing to
further rate cuts. "As usual, the Fed did NOTHING!," Mr. Trump
wrote on Twitter after Mr. Powell's speech. "My only question is,
who is our bigger enemy, Jay Powell or Chairman Xi?" referring to
Chinese President Xi Jinping.
Mr. Trump made light of the stock market's decline Friday,
tweeting that the Dow industrials' drop was "perhaps on the news
that Representative Seth Moulton, whoever that may be, has dropped
out of the 2020 Presidential Race!" -- referring to the
Massachusetts Democrat's exit earlier in the day.
The back-to-back developments Friday augured more potential
fireworks at this weekend's meeting of the Group of Seven rich
nations in the resort town of Biarritz, France.
The ructions coursing through the international trade system
were already expected to be a leading agenda item, along with
Britain's coming departure from the European Union. Mr. Trump is
scheduled to arrive there Saturday for Sunday meetings in which he
is expected to highlight the U.S.'s comparatively strong growth
compared to Europe's. Representatives of other countries are likely
to point to Mr. Trump's trade disruptions as a cause of economic
sluggishness.
Mr. Trump has frequently taken aim at individual companies in
trying to stop them from closing plants or firing workers and has
long urged companies to bring investment and jobs back to the
U.S.
On Friday, he also said he would require shipping companies to
block shipments of fentanyl from China and elsewhere. The president
has blamed Beijing for not following through on a commitment in
earlier trade negotiations to curb flows into the U.S. of the
addictive and potentially lethal painkiller.
Some companies have altered course because of the bully-pulpit
pressure, while others haven't responded to his criticism. On
Friday some business leaders bristled at receiving presidential
orders via Twitter.
"The president does not have the authority to tell companies
what to do, " said Myron Brilliant, head of international affairs
at the U.S. Chamber of Commerce, in an interview. "He can provide
guidance, he can provide his own thoughts, but U.S. companies are
going to continue to invest and do business with China because it's
too important a market."
Big-business groups say they understand the frustration many
American firms have with Chinese economic practices, but they back
a return to negotiations on a broad deal. "There are legitimate
issues that the president is trying to address," Mr. Brilliant
said.
High-level talks with China are still scheduled for September,
White House trade adviser Peter Navarro said Friday morning on Fox
Business Network.
Mr. Trump can't directly prevent American companies from doing
business in China, trade lawyers say, but he can further penalize
production in China with the use of more tariffs or higher tariff
rates. The federal government can also provide incentives for
building factories in the U.S. and release orders preventing U.S.
firms from cooperating with certain Chinese companies, such as
Huawei Technologies Co. Mr. Trump has also publicly shamed
companies for investing in production abroad or failing to move
manufacturing to the U.S.
American business leaders worry any further steps to advantage
American manufacturing -- including adding more Chinese firms to
Washington's "entity list" of banned companies -- would be met with
quick and painful retaliation against U.S. firms in China.
"For years, retailers have been diversifying their supply
chains, but finding alternative sources is a costly and lengthy
process that can take years," said David French, senior vice
president of government relations at the National Retail
Federation. "It is unrealistic for American retailers to move out
of the world's second largest economy, as 95% of the world's
consumers live outside our borders."
"Our presence in China allows us to reach Chinese customers and
develop overseas markets," he added. "This, in turn, allows us to
grow and expand opportunities for American workers, businesses and
consumers."
Write to William Mauldin at william.mauldin@wsj.com, Alex Leary
at alex.leary@wsj.com and Chao Deng at Chao.Deng@wsj.com
(END) Dow Jones Newswires
August 23, 2019 17:37 ET (21:37 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.