China recently announced that they would retaliate for Trump's upcoming tariffs on all remaining Chinese goods totaling about $300 billion in value by imposing higher tariffs on $75 billion in American goods.
Trump responded to China's retaliatory tariffs by tweeting that he would increase the size of his upcoming tariffs and the office of Trump's trade representative, Robert Lighthizer, has now turned his tweets into official policy by publishing a notice in the Federal Register.
The USTR will impose a 15% tariff on some of the targeted goods from Sept. 1, with the rest, including cell phones and laptop computers, to get a 15% tariff on Dec. 15, the agency said in a Federal Register notice. The Trump administration had previously planned to impose a 10% tariff on these imports.
Trump announced the tariff increase last Friday on Twitter, in response to Chinese retaliatory tariffs on $75 billion worth of U.S. goods, including crude oil.
The Federal Register notice, however, did not mention Trump’s announcement of his intention to increase the duty to 30% on a $250 billion list of Chinese imports on Oct. 1 that have already been hit with a 25% tariff. USTR has previously said it planned to conduct a public comment period on that increase.
There's no reason to think Trump's previous tariffs on $250 billion in Chinese goods will not be increased to 30 percent on October 1st so, by my precise calculations, that means Trump's trade war with escalate at least three times in the next three months.
Trump will impose new tariffs and China will impose retaliatory tariffs on September 1st. Trump will impose higher tariffs on October 1st. Trump will also impose new tariffs and China will impose retaliatory tariffs on December 15th.
That's at least three opportunities for financial markets to tank and, if past is prologue, it seems likely that Trump will not make it to December and possibly not even October without adding something else to the pile. European trade officials have been bracing for the possibility that Trump will impose tariffs on European goods in November.
There are times when I feel like a broken record writing about trade multiple times per day, but what can I say? Trump necessitates this level of coverage of an issue that's connected to almost everything else including the outcome of the 2020 election. If the economy falls into recession, we will know exactly how and why it happened because we've seen it coming day by day.