Exporters are preparing for a September 1 increase in U.S. duties in a fight over trade and technology.
The levies will range from 5 to 10 percent and will be put in place in two rounds, on September 1 and December 15 - the same dates on which President Donald Trump's latest tariffs on $300 billion in Chinese goods are slated to take effect, the State Council's Customs Tariff Commission said in a statement. He "ordered" United States companies to change their production strategies, but did not say how he would enforce such an order.
It said 5,078 American products would see duty hikes of 5 or 10%, and that on December 15, it would hit "American-made vehicles and auto parts" with tariffs of 5 or 25%, according to Xinhua. "President Xi said this would stop - it didn't". "We do not want to see a further deterioration of US-China relations", Myron Brilliant, executive vice-president and head of the business group's worldwide affairs, said in a statement. The tech-heavy Nasdaq Composite was down 2.6 per cent, the S&P 500 index fell 2.1 per cent and the Dow Jones Industrial Average shed 1.9 per cent.
"It's a striking departure for American policy on China; it's even a striking departure from Trump's policies and comments on China of just a few weeks ago", said Gordon Chang, an author and frequent Fox News commentator who espouses hawkish views on China.
Ford, a net exporter to China, said in a statement it encouraged the United States and China to find a near term solution.
On Friday, China said it will implement new tariffs of between 5% and 10% on $75 billion in USA goods, including agricultural products, crude oil and small aircraft.
According to a separate announcement made by the commission Friday, China will resume imposing additional tariffs of 25 percent or 5 percent on American-made vehicles and auto parts starting from 12:01 p.m. December 15. In 2018, Brazil sent record volumes of soybeans to China as China significantly reduced its soybean exports from the U.S.
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China promised earlier this week that any new tariffs from the U.S. would lead to escalation and retaliation.
The tariffs of 10% and 5% take effect on two batches of goods on Sept 1 and Dec 15, the official Xinhua News Agency said. "I don't want them to build them in China", Trump said last month.
The most effective option for Trump would be to restrict federal procurement from any companies that do business in China.
China had lifted punitive tariffs on American cars and auto parts earlier this year as a goodwill measure while trade talks were underway. "We need substantive trade agreements that ensure American agriculture can provide an abundant and safe food supply for the world's growing population".
BMW, Tesla, Ford and Mercedes Benz are likely to be the hardest hit by the Chinese auto tariffs.
White House trade adviser Peter Navarro this morning downplayed the move as "well anticipated".
"It is essential for these two important economies to work together to advance balanced and fair trade", the company said.