The U.S. is also planning tariffs on metal and electronic components and equipment used in power plants, farming machinery, factories, papermaking, aircraft manufacturing and metalworking.
Meanwhile, China's retaliatory tariffs, also worth $34 billion, targets goods from soybeans to lobsters to pork. That means American goods are more expensive for Chinese consumers and businesses, prompting them to look to other countries, like Brazil and the EU, for supplies and goods. That hits U.S. farmers and manufacturers who now need to look elsewhere for buyers.
Recession risk?
A full-fledged trade war, economists at Bank of America Merrill Lynch and elsewhere warn, risks tipping the U.S. economy into recession.
And those caught in the initial line of fire — U.S. farmers facing tariffs on their exports to China, for instance — are already hunkered down and fearing the worst. The price of U.S. soybeans has plunged 17 percent over the past month on fears that Chinese tariffs will cut off American farmers from a market that buys about 60 percent of their soybean exports.
"For soybean producers like me this is a direct financial hit," Brent Bible, a soy and corn producer in Romney, Indiana, said in a statement from the advocacy group Farmers for Free Trade. "This is money out of my pocket. These tariffs could mean the difference between a profit and a loss for an entire year's worth of work out in the field, and that's only in the near term."
Even before the first shots were fired, the prospect of a trade war was worrying investors. The Dow Jones industrial average has shed nearly 1,000 points since June 11.
The Chinese currency, the yuan, has dropped 3.5 percent against the U.S. dollar over the past month, giving Chinese companies a price edge over their U.S. competition. The drop might reflect a deliberate devaluation by the Chinese government to signal Beijing's "displeasure over the state of trade negotiations," according to a report Thursday from the Institute of International Finance, a banking trade group.
The Trump administration sought to limit the impact of the tariffs on U.S. households by targeting Chinese industrial goods, not consumer products, for the first round of tariffs. But that step drives up costs for U.S. companies that rely on Chinese-made machinery or components and may force them to pass them along to their business customers, and eventually to consumers.
Chick-fil-A impact
If you like Chick-fil-A sandwiches, for instance, you may feel the impact of the tariffs. Charlie Souhrada, a vice president of the North American Food Equipment Manufacturers, says the duties could raise the cost of a pressure cooker made by one of its members, Henny Penny. Chick-fil-A uses the cooker for its sandwiches. The administration has placed "these import taxes squarely on the shoulders of manufacturers and by extension consumers," Souhrada said.
The Federal Reserve is already picking up signs that the threat of a trade war is causing businesses to rethink investment plans. In the minutes from its June 12-13 meeting, the Fed's policymaking committee noted: "Contacts in some districts indicated that plans for capital spending had been scaled back or postponed as a result of uncertainty over trade policy,"
And if Trump extends the tariffs to $550 billion in Chinese imports, there's no way consumers could avoid being caught in the crossfire: The taxes would have to hit consumer products like televisions and cellphones.
Consider what happened to the price of washing machines that were subjected to a separate series of Trump tariffs in January. Over the past year, their price has surged more than 8 percent, compared with a slight drop in overall appliance prices.
Even the first round of tariffs means that "American consumers are one step closer to feeling the full effects of a trade war," said Matthew Shay, president of the National Retail Federation.
"These tariffs will do nothing to protect U.S. jobs, but they will undermine the benefits of tax reform and drive up prices for a wide range of products as diverse as tool sets, batteries, remote controls, flash drives and thermostats," Shay said. "And students could pay more for the mini-refrigerator they need in their dorm room as they head back to college this fall... a strategy based on unilateral tariffs is the wrong approach, and it has to stop."