WASHINGTON (AP) -- Fears on Wall Street Friday of an all-out trade war with China came after President Trump upped the stakes again in the multi-billion dollar tariff battle.The President asked for additional tariffs Thursday on $100 billion of Chinese imports and China responded with a warning.
"We do not want to fight, but we are not afraid to fight a trade war. China will fight back for sure," said Gao Feng, a spokesman for the Chinese Commerce Ministry.
Tension has been mounting all week with President Trump first calling for a tax on $50 billion dollars of Chinese goods.
"China's illicit trade practices -- ignored for years by Washington -- have destroyed thousands of American factories and millions of American jobs," Trump said in a statement announcing the decision.
China retaliated Wednesday with its own tariffs on $50 billion dollars of American products, including pork, beef, soybeans, whiskey, wine and aircraft.
China is the United States' largest trading partner. Last year, the U.S. bought $500 billion in Chinese goods and sent $130 billion in exports to China.
"It will make it hard for the United States to get cheap foreign goods and that's one thing that's fueling the economy right now. If goods become much more expensive, that means every household is going to have money taken away from them," said Henry Brady, Dean of the UC Berkeley Goldman School of Public Policy.
Brady says a trade war with China could hurt Republicans, taking focus away from the tax cuts ahead of the mid-term elections, and there could be other consequences.
"One of the weapons China has here is they can as an authoritarian country hold out longer than we can, if it starts hurting their economy. And second of all because they hold so much U.S. debt they can start threatening not to buy it," said Brady, noting that budget President Trump signed increased the deficit, which increases the need for the U.S. to sell debt.
President Trump says China needs the U.S. to fuel China's economic growth.
On Friday in a tweet, President Trump accused China of unfair trade saying. "China, which is a great economic power, is considered a Developing Nation within the World Trade Organization. They therefore get tremendous perks and advantages."
"Just give us another 24-48 hours. You're going to see what I call a trade coalition of the willing to change and get China back into the world by abiding by the laws," said Larry Kudlow. the National Economic Council Director.
The Trump administration has said it wants to crack down on China's theft of American intellectual property.
"We can't allow China, which is a first-world country now and has to play by the rules, to steal our technology. Because when they steal our technology, they are stealing the guts of the American future," Kudlow told reporters outside the White House. But he stressed that differences between the nations could be solved through negotiation.