China will retaliate with tariffs on $75 bn more of US goods and resume auto tariffs

China plans to raise import tariffs on $75 billion worth of US goods
China said Friday it will impose new tariffs on $75 billion worth of U.S. goods and resume duties on American autos.

The Chinese State Council said it decided to slap tariffs ranging from 5% to 10% on $75 billion U.S. goods in two batches effective on Sept. 1 and Dec. 15. Those dates happens to be when President Donald Trump’s latest tariffs on Chinese goods are to take effect.

It also said a 25% tariff will be imposed on U.S. cars and a 5% on auto parts and components, which will go into effect on Dec.15. China had paused these tariffs in April.

Stocks tumbled and bond yields fell following the announcement.

The retaliatory tariffs came after Trump earlier this month surprisingly ended a trade war cease-fire by threatening to impose 10% tariffs on another $300 billion of Chinese goods. Some of those tariffs have been delayed to December to avoid any impact on holiday shopping season and some items were removed from the list.

“In response to the measures by the U.S., China was forced to take countermeasures,” the state council said in a statement. “The Chinese side hopes that the U.S. will continue to follow the consensus of the Osaka meeting, return to the correct track of consultation and resolve differences, and work hard with China to end the goal of ending economic and trade frictions.”

Trump and Chinese President Xi Jinping had reached the truce at the G-20 summit last month in Osaka, Japan. The two sides held talks in Shanghai last month and are scheduled to resume negotiations early next month in Washington.

The trade battle between the world’s two largest economies has dragged on for more than a year and a half. Chinese purchases of U.S. agricultural products remain a big sticking point. Trump claimed China didn’t follow through on Xi’s promise to resume purchases of farm products.

White House trade advisor Peter Navarro said last week there are still many “structural issues” the U.S. needs to settle with China before they can reach a deal. These issues include cyber intrusion into U.S. business networks, forced technology transfer, intellectual property theft and currency manipulation, he said.