U.S. to Consider Additional $100 Billion in China Tariffs

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WASHINGTON—President Donald Trump threatened a major escalation in trade tensions with Beijing on Thursday, saying he was considering imposing tariffs on an additional $100 billion in imports from China.

The move would triple the amount of Chinese goods facing levies when entering the U.S., up from the tariffs on $50 billion in imports from China that the president announced last week.

Mr. Trump, who justified the tariffs on Chinese imports by citing alleged violations of U.S. intellectual property laws, said Thursday that an escalation would be due to Beijing’s “unfair retaliation,” which could “harm our farmers and manufacturers.”

Mr. Trump also said he would instruct the Agriculture Secretary to put together a plan “to protect our farmers and agricultural interests,” but he provided no details.

After the U.S. threatened tariffs on Tuesday, China quickly came up with its own $50 billion hit list of U.S. exports to China, including aircraft and soybeans. That retaliation has led to outcries from agricultural interests and lawmakers, which has put pressure on Washington to back off its hard-line stance to China.

In response to the possible new U.S. tariffs, China’s Commerce Ministry said Beijing would respond with its own countermeasures should it come to that. “The Chinese side will follow suit to the end, not hesitate to pay any price, resolutely counterattack and take new comprehensive measures in response,” a ministry statement said citing an unnamed spokesman.

The spokesman suggested that China is waiting to see if the Trump administration will go ahead and act, saying “We will listen to its words and watch its actions.”

The threat of new tariffs and further retaliation was almost certain to cause fears of a full-scale trade war among investors, farmers and businesses with ties to the China trade. Thursday’s announcement was issued after the close of stock trading, but recent trade tensions with Beijing have already fueled wide price swings in recent trading sessions.

The escalation ”increases the likelihood that things will go off the rails and there is a trade war,” rather than negotiations, said William Reinsch, a former Clinton administration trade official who is now at the Center for Strategic and International Studies. By tripling the U.S. tariff threat, he said, it could diminish international support and allow China “to say they are the rules keeper and they are playing fair. “

Dean Garfield, president of the Information Technology Industry Council, a high-tech trade group, called the Trump move “irresponsible and destabilizing.” He said both sides needed “to halt unproductive and escalatory rhetoric, recognizing that these words and actions have global consequences.”

The move Thursday caught much of Washington by surprise. Should Beijing choose to match the U.S. tariffs on imports from China, now potentially totaling $150 billion, with Chinese tariffs on U.S. exports to China of $150 billion, that would more than cover all U.S. exports to China.

In 2017, the U.S. exported $130.4 billion in goods to Beijing. China, on the other hand, exported $505.6 billion of goods to the U.S. Even with Mr. Trump’s threatened increase in the goods the U.S. will choose to penalize, that would only include about 30% of Chinese imports to the U.S.

Republicans in Congress had been growing increasingly unsettled with the president’s confrontational trade stance with China, but the announcement of possible new tariffs was met with strong criticism. “Hopefully, the president is just blowing off steam again,” said Sen. Ben Sasse, (R., Neb.). “But, if he’s even half-serious, this is nuts.”

Even before Mr. Trump’s announcement Thursday, key lawmakers from the president’s party were criticizing the confrontation with China. Sen. Pat Roberts (R., Kan.) on Thursday called the standoff with Beijing a “minefield” during remarks criticizing the administration’s policies at a commodity futures conference in Kansas.

Sen. Pat Toomey (R., Pa.) said Chinese practices, like allegedly stealing intellectual property, were problematic but that the Trump administration had instead trained its attention on trade deficits. “The administration is focused on the wrong problem and it is using the wrong tools to try to address it,” Mr. Toomey said in an interview before the announcement.

The Trump administration has said it acted only after a careful analysis of the facts but that China’s retaliation was without a similar analytical basis. China has also started an action in the World Trade Organization against the U.S. threatened retaliation.

U.S. Trade Representative Robert Lighthizer said Mr. Trump’s threatened action was an “appropriate response” to China’s actions. Mr. Lighthizer said U.S. industry would have time to comment on any additional tariff moves. The U.S. then has at least six months to levy the penalties.

Even as Mr. Trump tripled down on his threats against Beijing, he also offered something of an olive branch—a back-and-forth pattern that he has repeated over the past weeks. “The United States is still prepared to have discussions in further support of our commitment to achieving free, fair, and reciprocal trade,” he said in a statement.

Indeed, top Chinese economic envoy Liu He, Treasury Secretary Steven Mnuchin and Mr. Lighthizer have exchanged letters over outstanding trade issues. Mr. Trump is pushing for a $100 billion reduction in the U.S.’s $375 billion merchandise trade deficit with China. The U.S. also wants China to reduce its import tariffs on foreign cars and to open its financial markets, among other things.

“Economies around the world—including China’s own—would benefit if China would implement policies that truly reward hard work and innovation, rather than continuing its policies that distort the vital high-tech sector,” Mr. Lighthizer said.