Mnuchin admits potential trade war with China, stocks tumble amid fears

Administration warns of potential trade war
Administration warns of potential trade war 02:49

WASHINGTON -- Once again, fears about a possible trade war hit Wall Street hard Friday. The Dow fell more than 570 points, or 2.3 percent. "There is the potential of a trade war," said Treasury Secretary Steven Mnuchin. That prediction sent stocks tumbling.

"We know that there could be some fluctuation, but at the same time the president has said enough is enough," said Press Secretary Sarah Sanders. "China has to change this illegal and unfair practice that they've been in."

Fears Of Trade War Between U.S. And China Continue To Drag Markets Down
Treasury Secretary Steve Mnuchin is displayed on a television monitor the floor of the New York Stock Exchange (NYSE), April 6, 2018 in New York City. Drew Angerer/Getty Images

The White House is now threatening China with tariffs on $150 billion in imports, $100 billion more than its initial proposal.

"Our objective is not to be in a trade war with them," said Mnuchin. "I think that we can manage this without significant difficulty to the overall economy."

On a New York radio show, the president said short-term economic pain would be worth it.

"So we may take a hit and, you know what, ultimately we're going to be much stronger for it. But it's something we had to do."

The president accuses China of stealing U.S. intellectual property and other violations of global trade rules. The tariffs have not yet been implemented and the White House said it is open to negotiations with China, even though Beijing has been cool to talks.

China has threatened its own tariffs on U.S. products like pork and soybeans. That has rattled Republicans from agricultural states.

"Hopefully the president is just blowing off steam again," Nebraska Sen. Ben Sasse wrote in a statement. "But if he's even half serious, this is nuts."

"We are asking China to open markets, we are asking China to lower barriers which have prevented American companies from doing more in China and exporting more to China," said White House economic adviser Larry Kudlow. "If we can get those issues resolved positively, there's no damage to the American economy, it's all pluses. Plus, plus, plus, plus."

Kudlow and Mnuchin both said they don't want a trade war and that there will be at least two months for both countries to back down, but the threat of tariffs they said, is very real and not a bluff.