May 6, 2019 4:30 PM, EDT

Trump Warns He Will More Than Double Tariffs on Chinese Imports

Donald TrumpTrump's Twitter threat put a scare into the U.S. stock market May 6. (AP Photo/Alex Brandon)

Just days before Chinese trade negotiators are due to arrive in Washington, President Donald Trump threatened to escalate the trade war between the two nations.

Trump wrote in a May 5 tweet that he will dramatically increase tariffs on Chinese imports to 25% from 10%, starting May 10. He also threatened to impose tariffs on another $325 billion in imports from China, covering everything the country ships annually to the United States.

Trump’s threat triggered an immediate sell off on Wall Street on May 6, especially of U.S. companies with heavy business interests in China such as technology and industrial companies. The Dow Jones Industrial Average plunged to 26,033.95 after opening at 26,160.62. By the market’s close in the United States, the Dow had recovered much of the losses to end at 26,438.88.

Economists told Transport Topics if higher tariffs are imposed, the impact on the trucking and the freight industry in general could be significant.

“We’ll see a drop off in trade volumes because those tariffs are high enough that it will impede the demand for those goods, and we’ll have less trade flowing through the system,” said Paul Bingham, an economist at IHS Markit. “This would be a potential for a broader-based reduction in freight demand activity. We were already expecting to see slightly slower demand this year because of the acceleration of the imports last year.”

At the end of 2018, U.S. companies rushed billions of dollars in products into this country from China and stored those items in warehouses in anticipation of tariffs.

Economists said it’s the United States paying higher prices for Chinese goods.

“The U.S. can’t tax a foreign national. By a large measure, it’s a tax on the U.S. consumer and businesses. It’s not the Chinese that are paying it,” Bingham said.

Trump accused China of trying to “renegotiate” the terms of an agreement that negotiators have been working toward for months.

Speaking to reporters April 4, Trump said Chinese President Xi Jinping would be invited to a summit in the United States only “if we have a deal.”

National Economic Council Director Larry Kudlow said May 5 during an appearance on Fox News: “China has got to end its unfair, nonreciprocal trading system. They’re breaking the laws.”

Trump wants a commitment from China to purchase additional U.S. products.

Until the president’s tweets, recent administration statements about prospects for a deal had been optimistic. Just last week, Treasury Secretary Steven Mnuchin said recent negotiations in China were “productive.”

Last month, Trump said the two sides were on the verge of an “epic” and “monumental” deal that would address all of his complaints about Chinese trade practices.