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 firstname.lastname@example.org, Alex Leary at email@example.com and Chao Deng at Chao.Deng@wsj.com
(END) Dow Jones Newswires
August 23, 2019 17:37 ET (21:37 GMT)
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