(Bloomberg) --
Most Read from Bloomberg
-
Texas HOA Charged With Discrimination for Banning Section 8 Renters
-
How Sanctuary Cities Are Preparing for Another Showdown With Trump
-
LA Schools Wrecked by Fires Plead on GoFundMe for Help to Reopen
President Donald Trump widened his tariff threats to include China and the European Union on his second day back in office after day one saw Canada and Mexico in his sights.
“We’re talking about a tariff of 10% on China, based on the fact that they’re sending fentanyl to Mexico and Canada,” Trump said during an event at the White House on Tuesday, specifying Feb. 1 as a possible date.
“Other countries are big abusers also, you know it’s not just China,” Trump said. “We have a $350 billion deficit with the European Union. They treat us very very badly, so they’re going to be in for tariffs.”
The threats echo comments made throughout Trump’s campaign for a return to the White House and since his sweeping Nov. 5 victory. But the only actual action taken so far is the call for a review of trade practices that’s due by April 1, potentially giving China and others almost 10 weeks to avert new levies or address his demands.
China’s government reiterated their opposition to tariffs, with Ministry of Foreign Affairs spokeswoman Mao Ning saying Wednesday that there are no winners in a trade war, adding that China would safeguard its national interest.
Read: Trump’s China Tariff Threat Suggests More Pain to Come
Earlier Tuesday, Chinese Vice Premier Ding Xuexiang said China would expand its imports, saying the country did not seek a “trade surplus.” Bloomberg News has reported that people familiar with Trump’s discussions around China have said that he is interested in opening negotiations with China.
On Monday, the first day of his new term, Trump held off on ordering China-specific tariffs, even as he said that he intended to hit Canada and Mexico — both US neighbors and close allies — with the 25% levies by Feb. 1. That had fueled gains for Asian shares on Tuesday.
Market Volatility
Chinese stocks fell Wednesday after Trump’s latest comments, with the onshore benchmark CSI 300 Index headed for its first decline in five days and the Hang Seng China Enterprises Index the worst performer in Asia.
While the 10% level is lower than the potential levies of 60% on Chinese products that Trump floated during his election campaign, investors are bracing for more volatility.
“It only gets tougher from here,” said Xin-Yao Ng, an investment director at abrdn Plc in Singapore. “It’s a reminder that Trump will do something, because the first day might have given some the false impression that he might not. More gradual tariffs might also delay or reduce the force of stimulus that the market wants.”