UPDATE: China Responds to Trump Threat of $400 Billion in Tariffs

President Donald Trump is preparing to escalate his $50 billion in 25% import tariffs on Chinese goods with a second round of taxes at 10% worth $200 billion.

And if that doesn’t work, he indicates he might add $200 billion more to bring the total tariffs against Chinese goods to $450 billion. China immediately responded earlier today by doubling its plan for retaliatory tariffs to $100 billion.

The initial $50 billion U.S. tariff will begin on July 6. Its aim is to punish China for demanding that U.S. companies relinquish intellectual property in return for the right to do business in the country, The Wall Street Journal says.

Trump regards the U.S. tariff as an attempt to equalize an inequity in trade between the two countries. He argues that retaliatory tariffs by China would only perpetuate the imbalance. China’s threatened levy targets high-value U.S. goods, including cars.

If China follows through, Trump says he may launch a third round of tariffs worth an additional $200 billion. Doing so would hike U.S. tariffs to about 90% of the entire $505 million in goods the U.S. imported from China in 2017.

By comparison, China imported $130 billion in U.S. goods last year. The Journal notes that the trade imbalance gives Trump far more Chinese goods to tax than Beijing could match with products from the U.S. But the Journal says China could move beyond goods themselves by disrupting global supply chains or imposing new rules on American companies doing business in China.