Trump Says He May Upset China on Trade as U.S. Tariffs Loom
(Bloomberg) -- President Donald Trump said he’ll confront China “very strongly” over trade in the coming weeks, as his administration plans to announce on Friday a final list of tariff targets, which will be imposed shortly thereafter.
“China could be a little bit upset about trade because we are very strongly clamping down on trade,” Trump said in an interview with Fox News’s Bret Baier airing on Wednesday. The interview was conducted Tuesday aboard Air Force One after Trump met North Korean leader Kim Jong Un in Singapore.
The comments will heighten expectations that China will retaliate with tariffs of its own if the U.S. goes ahead with its plans. A spokesman for China’s foreign ministry reiterated at a briefing in Beijing on Thursday that previous progress in trade talks will be lost if the U.S. introduces new tariffs.
Trump has convened a meeting at the White House on Thursday to talk with his trade team about whether to move forward with tariffs on Chinese goods, according to two people familiar with the plans.
“You will see over the next couple of weeks. They understand what we are doing,” he said before praising his “good” personal relationship with Chinese President Xi Jinping.
The White House has said it’s proceeding with plans to impose duties on $50 billion of Chinese goods, after weeks of high level-discussions between the U.S. and China yielded little progress over a trade deal.
The Trump administration is reviewing a flood of comments to refine its initial list of $50 billion in imports that it revealed in April. In its preliminary list, the U.S. said it would levy an additional 25 percent duty on everything from TV components to dishwashers and snowblowers.
China has previously threatened to respond with proportional duties on everything from American soybeans to airplanes. The two countries have been trying to negotiate a truce to the trade spat. But at the latest round of talks in Beijing, Xi’s government warned that it will withdraw any commitments if Trump carries out his threat to impose duties.
If the U.S. and China descend into tit-for-tat tariffs, investors will become increasingly nervous about the prospect of a protracted trade dispute that will drag on global growth, said Michael Every, head of financial markets research at Rabobank Group in Hong Kong.
"Trade is going to be far more unpredictable going forward and so far markets keep trying to shrug it off as if it isn’t going to happen," Every told Bloomberg Television. "When it finally happens maybe the markets will wake up and realize, wow, this is actually happening."
Administration officials have cautioned that Trump has the final say.
“It’s always the president’s decision,” White House trade adviser Peter Navarro said Tuesday at an event in Washington.
The administration is expected to put the Chinese tariffs into effect by next month, said Ted Murphy, managing partner at the Washington office of law firm Baker McKenzie.
“That would be my baseline case: that they’re going to publish a final list on Friday with an effective date of July 1,” said Murphy, who sits on a trade committee that advises the Commerce Department and U.S. Trade Representative’s office. “Things change on a tweet, so if they think China is negotiating in good faith, they could delay it.”
North Korea Meeting
Trump’s warning comes just days after his meeting in Singapore with Kim over that nation’s nuclear weapons. China is a key player in talks to wind down North Korea’s nuclear program and bring peace to the Korean Peninsula.
China is widely seen as one of the big winners of Trump’s meeting with Kim as it hopes to maintain stability in its neighboring country and boost trade.
Trump on Tuesday thanked China for tightening its sanctions on trade with North Korea, arguing that the economic pressure along North Korea’s northwest border had helped bring Kim to the negotiating table.
The tariffs move would come against the backdrop of heightened tensions between America and its traditional trading and security partners.
A meeting of the Group of Seven ended in chaos this weekend, after Trump revoked support for a joint statement and lashed out at fellow leaders. Following the meetings, IMF Managing Director Christine Lagarde warned that the outlook for the global economy is growing “darker by the day.”
Businesses are lobbying to shape the final U.S. list, with many firms pushing for exclusions for products they use in their supply chains. Almost 125 companies testified in Washington during three days of hearings last month to collect feedback over the tariffs. Many warned that the tariffs would increase their costs and raise prices for consumers.
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