AILSA CHANG, HOST:
Chinese imports will be getting more expensive this fall. President Trump announced late today that he's boosting tariff rates on hundreds of billions of dollars' worth of Chinese goods. It's another sharp escalation in the two countries' tit-for-tat trade war. News of these higher tariffs came after what was already a rocky day on Wall Street. The Dow Jones Industrial Average lost more than 600 points or 2 1/3 percent while the S&P 500 fell more than 2.5%. For more on all of this, we are joined now by NPR's Scott Horsley.
SCOTT HORSLEY, BYLINE: Hi, Ailsa.
CHANG: So why did the president boost these tariff rates tonight?
HORSLEY: China fired a shot across the bow this morning when they announced new tariffs on some $75 billion worth of American goods, including cars. And the president was not happy about that. He couldn't look for new Chinese products to hit with tariffs because we're already adding taxes to just about everything the U.S. buys from China. So instead, the president announced that he's going to raise the tariff rate.
HORSLEY: Imports that were subject to a 25% tariff will now face a 30% tariff starting in October. Goods that were being taxed at 10% will see the tariff go up to 15%. But here's the thing. The White House is calling this retaliation for China's tariffs. China says its tariffs were retaliation for the tariffs that President Trump announced...
HORSLEY: ...Back on August 1. The administration always seems surprised when other countries respond to its protectionist actions with tariffs of their own. You'd think they'd kind of get the hang of this because we've gone through this cycle several times now.
CHANG: You'd think they would. All right. The president also had, like, a pretty extraordinary series of tweets earlier today. He insisted that U.S. companies stop relying on China for products. What did he say in those tweets?
HORSLEY: Yeah. We've seen a lot of provocative tweets from this president over the years, but today's tweet storm was still jaw-dropping. He began by complaining about the trade deficit with China - nothing new there. But then the president invoked some powers he doesn't actually have and tweeted, our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies home and making your products in the U.S.A. Now, the U.S. is still a free-market economy. The president...
HORSLEY: ...For all his powers, does not get to dictate to companies where they buy their products. But this is the tweet storm that sent the stock market reeling.
CHANG: But why were investors so rattled by those tweets if the president can't actually order companies to move their production away from China?
HORSLEY: Two things - one, it signaled another escalation in the trade war. And sure enough, that materialized after the market closed, when the president formally announced these higher tariff rates. Secondly, it's just another sign of the kind of haphazard policymaking we've been seeing from the White House all week. One day, they're calling for a payroll tax cut. The next, they say that's off the table. One day, the vice president's bragging about the greatest economy in history. Another day, the president's saying the economy needs a dramatic rescue from the Federal Reserve. Financial markets don't like uncertainty. And they're minting a lot of uncertainty at the White House these days.
CHANG: Yeah. The Federal Reserve chairman Jerome Powell talked about that today in Jackson Hole. What did he have to say?
HORSLEY: He did. Powell was addressing an annual conference of central bankers. And he said, in a lot of ways, the economy's doing well. Folks who've been on the sidelines are finally kind of starting to enjoy the fruits of the recovery. But he did say uncertainty around trade policy creates some unusual challenges for the Fed, and the president didn't like that. He's been haranguing Powell and his colleagues to be more aggressive in cutting interest rates. He's insulted the Fed chairman a lot, even talking about his golf game.
HORSLEY: And those insults continued on Twitter today.
CHANG: That's NPR's Scott Horsley.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.