WASHINGTON – China said Monday it will slap tariffs on more than 5,000 U.S. products in retaliation for President Donald Trump’s decision to raise duties on Chinese goods amid trade talks between the world’s two largest economies.
China’s Ministry of Finance said the new tariffs would impact $60 billion in U.S. imports and would range from 5% to 25%. The tariffs will take effect June 1, which would give the two sides time to resume trade negotiations that broke off last week without reaching a new deal.
The tariffs will impact a wide range of U.S. products, including coffee, beef, salmon, flowers and some fruits and vegetables.
China said it was levying the tariffs because of Trump’s decision to raise duties on Chinese products “contrary to the consensus between China and the United States on resolving trade differences through consultations.” The U.S.’s actions are “jeopardizing the interests of both sides and not meeting the general expectations of the international community,” China said.
Stocks tumbled following China’s announcement.
The Dow Jones industrial average dropped 566 points, or 2.2%, to 25,372 in early trading, while the Standard & Poor’s 500 index lost 67 points, or 2.3%, to 2,813. The tech-heavy Nasdaq, which has been the most vulnerable to trade tensions, plunged 243 points, or 3.1%, to 7,674 Monday morning.
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Cailin Birch, global economist at The Economist Intelligence Unit, said she still expects the U.S. and China to reach a limited trade agreement in the next month or so because of the serious economic ramifications both countries will be dealing with otherwise.
“However, a cooling-off period may be necessary to allow each party to save face, before meaningful progress can be made,” she said. “And without a doubt, the risk that a deal will fail to materialize has risen considerably, now that trust has been eroded on both sides.”
The Chinese acted shortly after Trump warned them not to take any action and urged President Xi Jinping to sign a new trade deal.
“I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries,” Trump tweeted.
“Too expensive to buy in China,” he added. “You had a great deal, almost completed, & you backed out!”
Trade talks between the two countries stalled Friday without a new deal after Trump raised tariffs on $200 billion in Chinese goods to 25% from 10%, including office furniture, handbags and frozen catfish fillets, after trade talks between the two countries stalled.
Trump said in a tweet Sunday that China “broke the deal” and “tried to renegotiate.”
The U.S. Trade Representative’s Office also has started the process of levying tariffs on another $325 billion in Chinese goods, a move that would mean that virtually every Chinese import that enters the U.S. will be subject to a levy.
Contributing: Janna Herron
More: Trump says tariffs only hurt China, but top adviser Kudlow admits ‘both sides will suffer’