The administration of U.S. President Donald Trump placed more tariffs on roughly $110 billion U.S. in Chinese imports over the weekend, further escalating the trade war between the world’s two biggest economies.
The 15% U.S. duty hit consumer goods ranging from footwear and apparel to home textiles and technology products such as the Apple Watch. A separate group of $160 billion U.S. in Chinese goods -- including laptops and cellphones -- will be hit with 15% tariffs on December 15.
Investors sought the safety of the yen as the currency markets opened for trading, with the Japanese exchange rate advancing 0.3% against the dollar. U.S. and Japanese equity futures fell in early Asian trading as the tariffs kicked in, even though the measures had been widely anticipated. S&P 500 futures opened 1% lower before paring losses, and Treasury contracts advanced.
While the Trump administration has dismissed concern about a protracted trade war, business groups are calling for a tariff truce and the resumption of negotiations between the U.S. and China. In-person talks between Chinese and American trade negotiators scheduled for Washington in September are still on for the time being.
While Trump has repeatedly said China is paying for his tariffs, many companies and economists say that U.S. importers bear the cost -- and some of it is passed on to the American consumer. The non-partisan Congressional Budget Office has projected that, by 2020, Trump’s tariffs on Chinese imports will reduce the level of real U.S. GDP by about 0.3% and reduce average real household income by $580 U.S.
