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Trump To Raise Tariff Rates In Continually Escalating Trade War

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In response to China announcing plans to impose news tariffs on $75 billion worth of U.S. imports, President Donald Trump decided on Friday to raise the rate of tariffs previously imposed on Chinese imports.

Trump announced the 25 percent tariff on approximately $250 billion worth of Chinese imports will be raised to 30 percent beginning October 1st.

Additionally, the 10 percent tariff on the remaining $300 billion worth of Chinese imports that Trump announced earlier this month will now be 15 percent.

"For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more," Trump said on Twitter. "Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight."

"Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer," he added. "As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship."

Trump said China should not have imposed the new tariffs on U.S. imports, calling the move "politically motivated."

The Chinese tariffs, which include 5 percent levies on U.S. soybeans and crude oil imports, were announced in response to Trump's original plan to impose a 10 percent tariff on $300 billion worth of Chinese imports.

Trump initially responded to the news of China's retaliatory tariffs by saying on Twitter that he is ordering U.S. companies to start looking for alternatives to doing business with China.

Trump claimed the U.S. does not need China and would be "far better off without them" and subsequently ordered American companies to "immediately start looking for an alternative to China."

"Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won't let that happen!" Trump tweeted.

"We don't need China and, frankly, would be far better off without them," he added. "The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP."

Trump called on U.S. companies to start making their products in America, although it was not immediately clear if the president will actually attempt to use executive authority to force companies to change their businesses practices.

The president also said he is ordering all carriers, including FedEx (FDX), Amazon (AMZN), UPS (UPS), and the U.S. Postal Service, to search for and refuse all deliveries of Fentanyl from China.

Claiming Fentanyl kills 100,000 Americans a year, Trump said Chinese President Xi Jinping has not followed through on pledges to stop trafficking of the synthetic opioid pain reliever.

Trump's tweets sparked a sell-off on Wall Street, offsetting a positive reaction to Federal Reserve Chairman Jerome Powell's highly anticipated speech at the Jackson Hole Economic Policy Symposium.

Powell reiterated during his prepared remarks that the central bank will "act as appropriate" to sustain the U.S. economic expansion.

"We are carefully watching developments as we assess their implications for the U.S. outlook and the path of monetary policy," Powell added.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said Powell's comment sounds "analogous to the 'closely monitor' language the Fed last used in the May FOMC statement to indicate a rate cut was coming soon."

"In contrast, in the July statement the FOMC only pledged to 'continue to monitor' the incoming data which, coupled with Powell's post-meeting press conference, gave the impression that the Fed wasn't in a rush to cut rates again," Ashworth said.

Ashworth subsequently believes that Powell's closely watched speech appears to open the door to another rate cut at the Fed's September meeting.

Meanwhile, Trump seemed less impressed by the Fed Chairman's remarks, going so far as to question if Powell is a "bigger enemy" than Chinese President Xi Jinping.

"As usual, the Fed did NOTHING! It is incredible that they can 'speak' without knowing or asking what I am doing, which will be announced shortly," Trump tweeted.

He added, "We have a very strong dollar and a very weak Fed. I will work 'brilliantly' with both, and the U.S. will do great."

While Powell is a Trump appointee, the president has repeatedly lashed out at the Fed for failing to heed his calls for dramatically lower interest rates.

(Photo: Gage Skidmore)

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