Just as Donald Trump was further threats aimed at Beijing after he launched another $200BN in tariffs targeting Chinese imports, and warning that "there will be great and fast economic retaliation against China if our farmers, ranchers and/or industrial workers are targeted!", China's Ministry of Finance issued a statement disclosing that it would retaliate by levying tariffs on another $60BN in US goods (effectively covering all US imports with tariffs), which would take effect from Sept. 24 at 12:01 p.m.

While the retaliation was expected, in what appears to be an olive branch to Trump, Beijing said that it would impose a 10% tariff rate on goods that it previously listed at a 25% rate, and a 5% rate for goods that previously were seen as being in the 10% rate bucket.

Here are the highlights, from Reuters and Bloomberg:

• CHINA SAYS NEW TARIFFS ON U.S. GOODS EFFECTIVE AT 1201 LOCAL HOURS ON SEPT 24
• CHINA TO LEVY TARIFFS ON $60B U.S. GOODS
• CHINA SAYS TO LEVY TARIFF RATES RANGING BETWEEN 5 TO 10 PERCENT ON U.S. GOODS
• CHINA SAYS NEW TARIFFS WILL BE LEVIED ON 5,207 U.S. PRODUCTS, UNCHANGED FROM INITIAL PROPOSAL

China also said that if the US insists on raising tariffs rates on Chinese goods (from 10% to 25% or more), China would respond accordingly, but noted that it hopes to stop trade frictions and hold a constructive dialogue.

The full statement, google translated:

According to the "Notice of the Customs Tariff Commission of the State Council on Adding Tariffs to Certain Imported Goods Originating in the United States (Second Batch)" (Announcement of the Taxation Committee [2018] No. 6), the relevant implementation matters are hereby announced as follows:

1. For the goods of the Taxation Commission [2018] No. 6 attached to the list of tariffed goods of the United States and Canada, the customs duty shall be imposed from 12:01 on September 24, 2018, and 2,493 tax items listed in Annex 1 shall be The 1078 tariff items listed in Annex 2 are subject to a 10% tariff, and 5% of the 974 tax items listed in Annex 3 and 662 items of tax items listed in Annex 4 are subject to a 5% tariff.

2. Other matters shall be implemented in accordance with the Notice of the Taxation Committee [2018] No. 6.

The Chinese State Council also issued the following announcement justifying the new tariffs (google translated):

On July 11, 2018, the US government announced a 10% tariff on goods imported from China of about 200 billion US dollars. On August 2, the tax rate was increased to 25%. On September 18, 2018, the US government announced the implementation of measures to impose tariffs on imports of approximately US$200 billion from China. Since September 24, 2018, the tariff rate has been increased by 10%, from January 1, 2019. The tariff rate has been increased to 25%. The US has been willing to go its own way, leading to escalating trade friction between China and the United States. In order to defend free trade and the multilateral system and defend its legitimate rights and interests, China has to impose tariff measures on the announced list of about 60 billion US dollars of goods.

According to the "People's Republic of China Foreign Trade Law", "People's Republic of China Import and Export Tariff Regulations" and other laws and regulations and the basic principles of international law, the State Council's Customs Tariff Commission decided to produce 5,207 tax items and about 60 billion US dollars of goods originating in the United States. , 10% or 5% tariff is imposed, starting from 12:01 on September 24, 2018. If the US insists on further increasing the tariff rate, the Chinese side will respond accordingly and the relevant matters will be announced separately.

The Chinese side reiterated that the purpose of implementing the above-mentioned tariff increase measures is to curb the escalation of trade frictions. It is a forced response to US unilateralism and trade protectionism. China hopes that the US side will stop trade frictions. China and the United States will adopt equality, integrity and pragmatism. Dialogue, mutual respect, and jointly safeguard the overall interests of bilateral economic and trade relations of mutual benefit and win-win, jointly safeguard the principle of free trade and the multilateral trading system, and jointly promote the prosperity and development of the world economy.

The dollar tumbled on the news...

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... while US equity futures dropped, fading most of this morning's gains.

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