WASHINGTON — China announced Thursday that it would take “necessary countermeasures” if President Donald Trump moves forward with tariffs set to take effect Sept. 1, continuing the back-and-forth escalation of the trade war even as the conflict elevates fears of a global economic slowdown.
Earlier this week, in a rare moment of easing, Trump announced that tariffs on certain consumer goods would be postponed until mid-December to spare consumers and companies some of the added costs during the holiday shopping season. It marked Trump’s first public acknowledgment that Americans shoulder the burden from his tariffs, but Trump tweeted that the move “actually helps China more than us,” and he said China would reciprocate.
But the Chinese response Thursday showed that Beijing was not appeased by the delay.
“The move by the U.S. seriously violated the consensus reached between the two heads of state in Argentina and Osaka, and deviates from the right track of resolving differences through consultation,” the Customs Tariff Commission of the State Council said in a statement. “China will have to take necessary countermeasures.”
Markets around the world slumped after China’s announcement, with the Dow Jones industrial average rising about 100 points, or 0.4 percent, by the closing bell.
“Every time investors find the strength to pick themselves up off the floor, the trade war delivers another blow and knocks them down again,” Craig Erlam, an analyst with OANDA, wrote in a note to investors Thursday. “This report also answers the question of whether China viewed the decision to delay half of the tariff hikes until mid-December as being conciliatory in any way or just an act of self-preservation, given the importance of the holiday season in the U.S.”
Chinese officials offered no further details as to what form countermeasures might take, or whether their trade negotiators would still be coming to the U.S. to continue talks in September. But the message shows that China is prepared to dig its heels in, even as it grapples with political protests in Hong Kong and a raft of disappointing economic data. Earlier this week, China reported levels of high unemployment, as factory output fell to a 17-year low, showing the breadth of the nation’s economic slowdown.
In the United States, similar omens are looming. For the first time since the run-up to the Great Recession, the yields — or returns — on short-term U.S. bonds eclipsed those of long-term bonds. This phenomenon, which suggests investor faith in the economy is faltering, has preceded every recession in the past 50 years.
“The stars are aligned across the curve that the economy is headed for a big fall,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “The yield curves are all crying timber that a recession is almost a reality, and investors are tripping over themselves to get out of the way.”
The panic caused the Dow Jones industrial average to shed about 800 points Wednesday, in its biggest single-day drop of 2019.
Stocks bounced around most of Thursday, a reflection of investor uncertainty over the competing issues of China trade, the global bond market and an expanding U.S. economy.
By the end of the day, there was not that much change from when the session started.
