So much for the China tariff truce

Just a week after U.S. Treasury Secretary Stephen Mnuchin declared a “truce” in President Donald Trump’s tariff war with China, today the White House has announced that it plans to put a 25% tariff on $50 billion in Chinese exports to the United States. By June 15, the Trump Administration will release a list of some $50 billion worth of Chinese goods that will be subject to a 25% percent tariff. The tariffs will target goods containing “industrially significant technology” and China’s “Made in China 2025 program. The White House said China had “pursued industrial policies and unfair trade practices including dumping, discriminatory non-tariff barriers, forced technology transfer, over capacity, and industrial subsidies that champion Chinese firms and make it impossible for many United States firms to compete on a level playing field.”

The Chinese government expressed surprise at the announcement–as you might imagine given the Trump administration’s talk last week of progress in reaching a framework for future discussions.

With the markets reeling from bad news out of Italy and continued downward pressure on oil prices, it’s hard today to measure the effects of this tariff news. Shares of Boeing (BA), which have been a good proxy for the ups and downs of the tariff wars are off a relatively modest 1.68% as of 2 p.m. New York time. On the oil market U.S. benchmark West Texas Intermediate is down 1.92% and international benchmark Brent is lower by 0.12%.

It’s not clear to me–or to the markets I’d say, how serious this new tariff threat is. It comes as U.S. Secretary of Commerce Wilbur Ross is due in China (on Saturday) to resume trade talks. The move could simply be part of President Trump’s negotiating style of making a dramatic threat and then negotiating back to a more temperate position. In that light it could be seen as simply an effort to strengthen Ross’s hand in these talks. (It is, of course, likely that if I can see this pattern in White House announcements, the Chinese can too. Which would limit its usefulness.”)

It’s unclear if this latest move will affect the ongoing talks to loosen restrictions on Chinese telecom gear maker ZTE or the recent award of four new trademarks in China to businesses run by Ivanka Trump.