TODAY |

Economists fear global recession as Trump raises tariffs on Chinese goods

President Donald Trump angrily escalated his trade fight with China today, raising retaliatory tariffs and ordering American companies to consider alternatives to doing business there.

Trump acted hours after Beijing said it would hike tariffs on $US75 billion in US imports, a move some economists fear could tip a fragile global economy into recession.

He also blamed Jerome Powell, the man he appointed as chairman of the Federal Reserve, for the state of the domestic economy, wondering who was a "bigger enemy" of the US — Powell or Chinese President Xi Jinping.

Even by the turbulent standards of the Trump presidency, his actions, all done via Twitter, were notable, sending markets sharply lower and adding to a sense of uncertainty on the eve of his trip to France for a meeting of global economic powers.

Trump's move came after Beijing announced Friday morning that it had raised taxes on US products.

He huddled with advisers, firing off tweets that attacked China and the Fed. And he mockingly attributed a Wall Street drop of 573 points to the withdrawal of a marginal candidate from the Democratic presidential race.

The Dow Jones average eventually closed down 623 points.

The president attacked the Fed for not lowering rates at an informal gathering in Jackson Hole, Wyoming, where no such action was under consideration.

Powell, speaking to central bankers, gave vague assurances that the Fed would act to sustain the nation's economic expansion, but noted that the central bank had limited tools to deal with damage from the trade dispute.

Trump said he would be raising planned tariffs on $US300 billion in Chinese goods from 10% to 15%.

The Office of the US Trade Representative also said existing tariffs on another $US250 billion in Chinese imports would go from 25% to 30% on Oct. 1 after receiving feedback from the public.

The impact could be sweeping for consumers.

"With each percentage point added to the tariff hikes, it becomes more and more difficult for importers not to pass the costs on to the U.S. consumer," said Wendy Cutler, a former U.S. trade negotiator now at the Asia Society Policy Institute.

"And this is not to mention the uncertainty that these increases contribute to the overall business environment."

The president appeared caught off-guard by China's tariff increase, and was angry when he gathered with his trade team in the Oval Office before departing for France, according to two people familiar with the meeting who spoke to The Associated Press on condition of anonymity because they were not authorised to disclose closed-door conversations.

Administration officials, including US Trade Representative Robert Lighthizer and adviser Peter Navarro, discussed potential retaliatory options. Treasury Secretary Steve Mnuchin, returning from vacation, joined by phone.

Earlier Friday, the president said he "hereby ordered" US companies to seek alternatives to doing business in China. The White House did not cite what authority the president could use to force private businesses to change their practices.

President Donald Trump, left, meets with Chinese President Xi Jinping. Source: Associated Press


More From