Live

Watch CBSN Live

Trump orders U.S. companies to "start looking for alternatives" to China

How China trade war may slow economic growth

President Donald Trump is demanding that U.S. businesses "immediately start looking for an alternative to China," including bringing their manufacturing back to the U.S. The president issued the directive in a series of tweets on Friday morning after China hiked tariffs on $75 billion of U.S. products.

Mr. Trump's tweets heighten trade tensions between the world's two biggest economies, with China's latest countermeasures coming in retaliation for the U.S. planning to impose a 10% tariff on roughly $300 billion in Chinese imports starting next month and in December. 

"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," Mr. Trump tweeted. "I will be responding to China's Tariffs this afternoon."

Mr. Trump did not say what steps his administration might take to deter companies from operating in China, and it is unclear what legal authority he has to do so. In theory, however, he could impose import and export restrictions that make commerce more difficult. 

Mr. Trump added he is "ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE,....all deliveries of Fentanyl from China (or anywhere else!). Fentanyl kills 100,000 Americans a year. President Xi said this would stop - it didn't."

Stocks dive as trade feud worsen

Investors, jittery over the trade war's impact on the global economy, sent U.S. markets sharply lower after Mr. Trump's tweets. The Dow dropped more than 500 points, or 1.9%, to 25,742, while the broader S&P 500 and tech-heavy Nasdaq each fell more than 2%.

With Mr. Trump threatening a further response to China's trade measures on Friday, investors are worried that the U.S. could decide to impose even steeper tariffs.

China's latest tariffs on U.S. imports represent "another tit-for-tat move and could increase the risk that President Trump will decide to raise the recent tariffs from 10% up to 25%," said Brian Rose, senior Americas economist at UBS Global Wealth Management, in a research note. "In our view, 25% tariffs would cause considerable economic damage and greatly increase the probability of a US recession in 2020."

Chamber of Commerce fears escalation

The U.S. Chamber of Commerce, the business organization, said it is urging "constructive engagement" between the two countries. 

"While we share the President's frustration, we believe that continued, constructive engagement is the right way forward," Myron Brilliant, head of international affairs, said in a statement. "Time is of the essence. We do not want to see a further deterioration of U.S.-China relations."

The Trump administration's use of tariffs on Chinese imports, which are paid by U.S. businesses, importers and American imports, are already causing some companies to shift manufacturing away from China and into other locations, such as countries in Southeast Asia. 

The retail industry pushed back against Mr. Trump's tweet, calling it "unrealistic."

"For years, retailers have been diversifying their supply chains, but finding alternative sources is a costly and lengthy process that can take years," said National Retail Federation senior vice president for government relations David French in a statement. "It is unrealistic for American retailers to move out of the world's second largest economy, as 95 percent of the world's consumers live outside our borders."

View CBS News In