Trump orders US companies to pull manufacturing out from China

Washington: In a move that will intensify the mounting trade war between the United States and China, US President Donald Trump threatened higher tariffs on Chinese imports and also asked US companies that are manufacturing in China to look for alternatives immediately.

Stocks in the United States moved sharply lower on Friday as Trump said he was ordering companies to look at how to close their operations in China and make more products at home.

Later in the day Trump said on Twitter that - starting on October 1 - the 25-per cent tariffs on $250bn worth of Chinese goods will rise to 30 per cent. Additionally, tariffs on the remaining $300bn in goods, due to begin on September 1, will now be set at 15 per cent, rather than 10 per cent.

The rhetorical strikes at Beijing came as trade tensions mounted, and as Trump faulted US Federal Reserve Chair Jerome Powell for not cutting interest rates aggressively enough.

The president called Powell an "enemy" in response to the central banker's remarks on Friday morning - comments that had partially blamed global economic weakness on the trade war with China.

The US dollar rose sharply against the Chinese yuan, US equity markets fell and oil prices dropped on Trump's latest social media salvo against China.

The S&P 500 went down 2.6 per cent for the day. The Dow Jones Industrial Average lost 623 points, or 2.4 per cent, to 25,629. The Nasdaq dropped three per cent.

Technology companies, which have much to lose in the trade battle, accounted for the biggest share of the market's losses. Chipmaker Nvidia slid 5.3 per cent and Apple lost over four per cent.

Companies that rely on consumer spending also took losses.

Experts said that Trump cannot legally compel US companies to abandon China immediately, and he gave no details on how he might proceed with any such order.

"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 USA," Trump wrote on Twitter.

"We don't need China and, frankly, would be far better off without them."

Experts also said tax policy changes and sanctions could be used to restrict or reduce US business activity in China, but it would take years to disentangle the world's two largest economies.

The consequences of a complete break to the world economy could be severe. China, for instance, holds $1.11 trillion in US Treasury securities.