President Donald Trump on Friday more than doubled the tariff rate on roughly $200 billion worth of Chinese imports, a move that sets the stage for retaliation from Beijing and that significantly raises the stakes in a yearlong trade war between the world's largest economies.
After accusing China of reneging on past trade commitments, the Trump administration has sought to increase pressure on Chinese officials in negotiations taking place this week. About $250 billion worth of Chinese products will now face a 25% duty when shipped to the US. Previously, a majority of those had been subject to a 10% import tax.
That could lead to higher prices on a wide range of everyday products from electronics to clothing. While Trump claims Chinese companies will pay the price, research suggests American businesses and consumers bear the brunt of tariffs.
Officials at the Chinese Commerce Ministry — who have denied that they made reversals on major aspects of a draft trade agreement — vowed on Wednesday to take countermeasures against increased tariff rates.
Those could include tariffs on American products or other trade barriers. China has already placed retaliatory duties on $110 billion worth of imports from the US, which had caused significant trouble for the US agricultural sector.
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The escalation comes just as officials were thought to be nearing a deal. As recently as last week, there were high hopes for the two days of trade negotiations in Washington that began on Thursday.
While both countries have indicated a trade deal is still possible, questions have been raised about the timeline of and the ability to enforce an agreement.
"China can be made to fold, but it would require much more sustained action than the US has taken to now," said Derek Scissors, a resident scholar at the conservative-leaning American Enterprise Institute. "More likely, China does not fold and smaller-scale US action becomes permanent."
Trump on Monday also threatened to slap steep tariffs on all remaining Chinese imports, roughly $325 billion worth, a move that economists warn would have widespread effects on businesses and consumers.
"New tariffs on those goods that president has so far left untaxed will fall on American families, as these mostly hit textiles, apparel, shoes, home goods, etc.," said Mary Lovely, a trade scholar at the Peterson Institute for International Economics.
"Higher taxes on these goods are likely to be highly regressive, in that lower and middle class Americans spend a higher portion of their income on these Chinese imports than do higher income Americans," she continued.
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