U.S. President Donald Trump said on Monday he will impose 10 percent U.S. tariffs on about $200 billion worth of Chinese imports, but he spared smart watches from Apple (AAPL.O) and Fitbit (FIT.N) Inc and other consumer products such as bicycle helmets and baby vehicle seats.
Collection of 10 per cent tariffs on thousands of goods will start on September 24 but the rate will increase to 25 per cent by the end of the year, allowing U.S. companies some time to adjust their supply chains to other countries, a senior administration official said.
Trump spared smart watches from Apple and some other consumer products such as bicycle helmets, but he warned that if China takes retaliatory action he will pursue tariffs on approximately $267 billion of goods.
Trump said the tariffs aim to force a change in Chinese trade policies that he said posed "a grave threat to the long-term health and prosperity of the United States economy".
The White House has sought to pressure Beijing to reduce its trade surplus with the USA and protect intellectual property rights of American companies, which it says are abused in China.
"After brief hiatus, the trade war theme is back to start a new week", says Mark McCormick, North American head of FX strategy at TD Securities.
Kudlow declined to specify details of the expected announcement but noted that reports indicating Trump will unveil 10 percent duties on $200 billion in imports are "more or less correct".
If China then slaps tariffs on another $60 billion in U.S. goods, this will bring total United States exports subject to Beijing's retaliation to $110 billion, at 2017 sales levels.
That would mean imposing new taxes on all of the goods the United States imports from China.
Trump has threatened to tax all Chinese goods if Beijing does not change its trade practices and has already levied tariffs on steel and aluminum imports from other countries, including Canada, Mexico and the European Union.
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Yang Weimin, deputy director for economic affairs at the Communist Party's top advisory body, said at the China Development Forum in Beijing on Sunday that China would not negotiate while under pressure.
A second administration official told CNBC that the cost of these tariffs would amount to 10 percent of all imports targeted, down from earlier estimates of 25 percent.
It is also the biggest set of tariffs to date, and unlike the earlier rounds this latest list targets consumer goods, such as luggage and furniture. He has not been satisfied with the talks with China on this.
The tough talk and fear of more tariffs and retaliation rattled investors and sent indexes dropping.
"We must strive for American ownership of American companies in China". Japan has informed the WTO that it plans to impose retaliatory measures on USA goods to the tune of 50 billion yen (US$455 million).
United States companies have already said they are anxious about the effect of higher costs on their businesses. China's economy is slowing, with consumers holding back and infrastructure spending dropping sharply. "We don't have anything to announce to you today, in terms of any of the logistics of that, but, as the President has said, we are open to that and we hope that China will come to the table and address the concerns that we have raised", the official said.
The benchmark US 10-year note US10YT=RR last fell 1/32 in price to yield 2.9977 percent.
They also say USA economic growth and inflation are likely to have peaked this year, which could help to further turn the tide of market sentiment against the Dollar over coming months.
In the latest iteration, almost half of Chinese imports face tariffs, including consumer products that range from furniture to building products and seafood.
In theory, the tariffs will make US-made products cheaper than imported ones, and so encourage consumers to buy American.