Commerce, Economy / Finance, Multilateralism & Unilateralism

Trump Renews Trade War as China Talks End Without a Deal

May 10 2019

By Alan Rappeport and Ana Swanson – The New York Times

WASHINGTON — Trade talks between China and the United States ended on Friday without a deal, just hours after President Trump renewed his trade war with China by raising tariffs on $200 billion worth of imports and suggesting he was prepared for a long economic fight.

In a series of early morning tweets, the president said tariffs on Chinese goods would bolster the United States economy and warned that he would tax nearly all Chinese imports if Beijing did not accede to America’s demands. His comments, which came just ahead of talks between the two countries, suggested Mr. Trump is willing to prolong his trade war for the foreseeable future.

“Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch!” Mr. Trump added, adding that the Chinese “should not renegotiate deals with the U.S. at the last minute.”

The toughened stance has thrust the world’s two largest economies back into a trade war that just one week ago had seemed on the cusp of ending. Just weeks ago, Mr. Trump was talking about a signing ceremony with Xi Jinping, China’s president, for a trade deal he said would be “epic.” But talks between the United States and China broke down over the weekend, with Mr. Trump and his advisers balking at China’s attempts to renege on parts of an emerging trade agreement.

On Friday, it appeared that the trade dispute was lurching in the direction of an all-out economic war. In addition to raising tariffs to 25 percent on $200 billion worth of Chinese goods, Mr. Trump said his administration is preparing to tax another $325 billion worth of China’s imports. China has threatened to retaliate with its own “countermeasures,” which include ending purchases of American farm goods and erecting other nontariff barriers for companies trying to gain access to the Chinese market.

Steven Mnuchin, Treasury secretary, and Robert Lighthizer, Mr. Trump’s top trade negotiator, greeted the Chinese delegation on the steps of the office of the United States Trade Representative on Friday morning. But talks ended shortly after and the Chinese delegation is expected to return to Beijing on Friday evening.

As he left the talks and headed to the White House, Mr. Mnuchin told reporters that the discussions were “constructive.”

Stock markets fell in early morning trading, with the S&P 500 down more than 1 percent but regained some ground after Mr. Mnuchin’s comments.

It remains uncertain if the two countries can salvage a trade agreement that is complicated by political dynamics on both sides of the Pacific. Mr. Trump, who has promised to be tough on China, is eager to avoid being seen as signing a weak deal that does not take advantage of the leverage the United States has created with its tariffs. May 10, 2019

————

Related:

Petraeus: US has the advantage over China on trade — but not for long

By Matt Egan – CNN Business

Las Vegas (CNN Business)America’s negotiating advantage over China in trade talks won’t last forever, former CIA Director David Petraeus told CNN Business.

“In the short term, the US has enormous leverage,” Petraeus said Thursday during an interview at the SALT Conference in Las Vegas. The retired four-star general pointed to China’s need for the United States to keep buying its goods and the country’s slowing economy.

Political leaders in Beijing “are very concerned” about Trump’s threat to increase tariffs on China as soon as Friday, Petraeus said.

But the 2020 election will soon come into play.

“President Trump has to start worrying about what this does to the economy as he approaches his re-election campaign,” said Petraeus, who analyzes geopolitical trends in his role as chairman of the KKR Global Institute.

David Petraeus warned that a prolonged trade war could hurt President Donald Trump’s ability to run his 2020 reelection campaign on the economy.

Fears about a deepening trade war sent US stocks sharply lower this week, puncturing a period of calm and optimism on Wall Street.

Fitch Ratings warned that Trump’s proposal to raise tariffs on $200 billion of Chinese goods from 10% to 25% will damage the economy.

“American consumers will face higher prices and US jobs will be lost if the government’s threat becomes a reality,” Fitch Ratings wrote in a report on Thursday.

It’s unclear whether trade talks in Washington will be successful and forestall the threatened tariffs.

“I have no idea what’s going to happen,” Trump said on Thursday.

China has vowed to retaliate if the US tariffs go into effect.

If trade talks drag out and tariffs ding the economy, that could pose a risk to Trump’s re-election campaign.

“He’s going to run on the economy. He’s made that very, very clear,” Petraeus said. “He constantly stresses how the market is doing under him.”

Trump checks in on financial markets “every few hours” because he knows he can’t get re-elected if the stock market and economy “crash,” Stephen Moore, a Trump campaign adviser, said at SALT on Wednesday.

Petraeus said a “prolonged trade war” would put a “dent” in Trump’s ability to run on the economy.

“He will presumably start to feel some pressure to resolve this issue,” Petraeus said, “and show that the art of the deal is still present in his administration.”

site admin