Washington — US President Donald Trump barrelled through warnings of a damaging trade war with China on Thursday, vowing an additional $100bn in tit-for-tat tariffs on Beijing.
Having already asked for $50bn worth of Chinese goods to be punitively taxed, Trump responded to Beijing’s countermeasures by doubling down.
"Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers," Trump said in a defiant statement.
"In light of China’s unfair retaliation," Trump said he had instructed trade officials to "consider whether $100bn of additional tariffs would be appropriate." Trump said he was still open to talks, but only if they were aimed at achieving "free, fair, and reciprocal trade." On Thursday, China formally launched a World Trade Organisation (WTO) challenge against Trump’s first round of proposed tariffs.
In the text released by the WTO, China’s delegation requested "consultations" with Washington "concerning the proposed tariffs [and] measures that the US accords to certain goods in various sectors including machinery, electronics, etc. originating in China."
A "request for consultations" is the first step in a full-blown legal challenge at the WTO’s Dispute Settlement Body.
Beijing has also unveiled plans for painful import duties targeting politically sensitive US exports, including soya beans, aircraft and vehicles.
None of the tariffs have yet to come into effect, but the world’s two largest economies are in a game of chicken that could make the global economy collateral damage.
The prospect of a trade war has sent markets around the world on a rollercoaster ride, with traders seemingly unable to decide if the threat is real or bluster.
As news of Trump’s latest threat percolated, stock futures trading pointed to the Dow Jones Industrial Average opening more than 400 points down.
This spat — ostensibly for Beijing’s alleged theft of intellectual property and technology — is just one front in the ongoing trade tussle.
Trump has also threatened to impose steep tariffs on steel and aluminium imports, which would include China.
China responded with proposed tariffs on fresh fruit, pork and recycled aluminium, which accounted for $3bn of US exports in 2017.
The US has dominated the global economy for much of the last century, but this fight comes as China — with its population of 1.4-billion — is starting to challenge US hegemony.
And Beijing has the economic equivalent of a nuclear weapon, holding more than one trillion dollars’ worth of US debt.
Offloading just a portion of that debt could spook bond markets and send the US’s cost of borrowing soaring.
Trump repeatedly said during his election campaign that he would get tough with Beijing, but Thursday’s announcement was greeted with barely concealed horror, even among his own Republican Party.
"Hopefully the president is just blowing off steam again but, if he’s even half-serious, this is nuts," said Republican senator Ben Sasse.
"China is guilty of many things, but the president has no actual plan to win right now. He’s threatening to light American agriculture on fire. Let’s absolutely take on Chinese bad behaviour, but with a plan that punishes them instead of us. This is the dumbest possible way to do this."