Trader Tommy Kalikas works on the floor of the New York Stock Exchange as U.S. stocks skidded Monday morning after China raised import duties on U.S. products. | RIchard Dew/AP Photo China-Trump trade fight spurs market worries

The latest action in the trade fight involving China and the U.S. is sending a fresh shockwave through U.S. markets, which have been worried for months about President Donald Trump’s tough talk on trade.

The move is also causing alarm among agricultural groups and some farm-state politicians who warn that American farmers will be the first to suffer from the crossfire between Beijing and Washington.


“This is a tax on American farmers, brought about by protectionist trade policies," former U.S. Ambassador to China Max Baucus, who now co-chairs the Farmers for Free Trade coalition, said in a statement Monday. "American farmers appear to be the first casualties of an escalating trade war."

Beijing escalated the war of tariffs between China and the U.S. when it announced it would be moving forward with duties on $3 billion in U.S. exports on items like pork, wine and fruit as of Monday.

The stock markets on Monday fell sharply in the wake of the trade news as well as other factors that dragged down tech stocks. The Dow Jones Industrial Average ended the day down about 2 percent, or 450 points, to 23,644.19, while the broader Standard & Poor’s 500 index fell more than 2.2 percent to 2,581.88. Prices on lean hog futures for the May contract ended down 4.4 percent for the day and are off 20 percent since January.

Analysts from Moody’s Investors Service said escalating trade tensions sparked by tariffs from the U.S. has the potential to dampen an otherwise positive global economic growth outlook. The announcement came during a quarterly teleconference held with investors last week.

China's duties will hit 128 U.S. products, a bulk of them agricultural. Nearly $1 billion in U.S. exports will be hit with 15 percent tariffs, including 120 products covering fresh fruit, dried fruits and nuts, wine, modified ethanol, American ginseng and seamless steel pipes. Another group of U.S. goods, valued at nearly $2 billion, are now facing another 25 percent levy, including on pork and recycled aluminum.

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China said in a statement that it was imposing the new tariffs as a response to Trump's decision last month to impose tariffs of 25 percent on steel imports and 10 percent on aluminum in the name of national security.

The tariffs on the $3 billion in U.S. exports may be a small part of the $19 trillion American economy, but the added burden will be hitting farmers who are already struggling with low commodity prices and increased global competition.

“Moving forward with more far-reaching tariffs that result in retaliation and threaten to dismantle critical trade deals will have a crushing effect on America’s ability to create jobs here at home and feed families around the world," said Casey Guernsey, a former member of the Missouri House who leads the “Retaliation Hurts Rural Families” initiative organized by the group Americans for Farmers and Families.

Of all the ag products targeted, pork and pork variety meats will be the hardest hit by the new tariffs. China is the second-largest export market by volume for U.S. pork and pork variety meats, with the U.S. sending nearly $1.1 billion worth of the products over last year.

The U.S. Meat Export Federation, the industry's overseas marketing arm, warned Monday that the tariffs will have an "immediate impact" on U.S. producers and marketers as well as Chinese consumers. But Dan Halstrom, the group's president and CEO, added that he remained "hopeful that the additional duties can be rescinded quickly."

Several other industry groups that will suffer as a result of China's action are urging both the U.S. and China to reach some sort of deal to remove or at least soften the tariffs.

The Institute of Scrap Recycling Industries, for one, said it "had been hopeful" that discussions could have changed China's mind on the tariffs, which will affect nearly $1.2 billion in U.S. exports of scrap aluminum to China.

And the U.S. Chamber of Commerce on Monday urged both governments "to the negotiating table as soon as possible."

"We need near-term progress on the underlying Chinese industrial policies and market access restrictions that are tilting the playing field against U.S. companies and fueling overcapacity," Jeremie Waterman, president of the U.S. Chamber’s China Center, said in a statement to POLITICO. "Unilateral tariffs imposed by either government will do more harm than good.”

Neither the White House nor the Office of the U.S. Trade Representative would say whether meetings are taking place to address the impasse.

The new tariffs come just over a week after China had first warned that it was considering such a move if officials were not able to reach a solution with their U.S. counterparts through a dialogue at the World Trade Organization. Beijing launched that trade dispute at the WTO a week ago and indicated it would engage in a 30-day consultation period — but the decision to move forward with tariffs before the end of that window indicates the two sides were unable to make any progress on a solution.

Trade experts also warned that the retaliation could ramp up after Trump moves forward with a second set of tariffs and import restrictions on some $60 billion in Chinese exports.

The Trump administration is expected this week to publish a list of at least $50 billion worth of Chinese technology products that could be hit with U.S. tariffs in response to alleged Chinese intellectual property theft and forced technology transfers. So China's retaliation in the steel and aluminum dispute is probably intended to send a message in the technology case, one longtime China observer said.

"The Chinese are notorious for 'pre-emptive retaliation,'" the source said. "They often do not wait and wish to show strength quickly to try to deter future action."

California Citrus Mutual, an advocacy organization representing citrus growers in the state, blamed the new tariffs on "insufficient time" being given to focus on "constructive talks."

"While our administration focuses on those business sectors requiring attention, the Chinese administration has chosen to expand the discussion to include the agricultural industry," said the citrus group’ president, Joel Nelsen. "Now Chinese consumers and California citrus producers are innocent parties to a trade debate."

The White House did criticize China‘s move to impose duties.

"China's subsidization and continued overcapacity is the root cause of the steel crises," White House spokeswoman Lindsay Walters said in a statement on Monday. "Instead of targeting fairly traded U.S. exports, China needs to stop its unfair trading practices which are harming U.S national security and distorting global markets."

The latest tensions show little signs of de-escalating. Cui Tiankai, China’s ambassador to the U.S., had said last month that China wasn’t afraid of a trade war.

“We will certainly fight back and retaliate,” he said. “If people want to play tough, we will play tough with them and see who will last longer.”

Blake Paterson contributed to this report.

