President Trump announced Friday on Twitter that tariffs on Chinese imports will increase 5 percentage points in a tit-for-tat response to China’s own plans to place new duties on U.S. goods.

About $250 billion of goods produced by China and imported into the U.S. already have a 25% tariff. This newest increase will push tariffs to 30% beginning October 1, 2019. Trump also increased “List 4” tariffs from 10% to 15%. The List 4 tariff, which affects the remaining $300 billion of Chinese imports, will go into effect September 1 and December 15.

The increase in tariffs on Chinese imports follows news earlier Friday that China will impose $75 billion worth of duties on U.S. goods, beginning Sept. 1 and December 15. China’s foreign ministry said that it would resume tariffs on U.S. imports of automobiles and auto parts and place an additional 5% or 10% tariff on agricultural and food products like soybeans, coffee, whiskey and seafood.

U.S. automakers Ford, GM, Fiat Chrysler Automobiles and Tesla all saw shares fall in response to China’s new tariffs. Automakers that build vehicles in the U.S. for export to China — a group that includes Tesla and Ford — will take the brunt of China’s newest tariffs. The move could force these companies to raise prices, which could further dampen sales.

The president’s initial response on Twitter to China’s decision sent the market into a tailspin. The Dow Jones Industrial Average fall by as much as 700 points before closing the day slightly down only 623 points at 25,628.60. The S&P 500 Index fell 75.84 points to end the day at 2,847.11 and the Nasdaq dropped 239.62 points to close at 7,751.77.

Trump’s tariffs announcement came after markets closed Friday.

 

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