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Trump Doubles Down on Potential Trade War With China Trump Doubles Down on Potential Trade War With China
(about 1 hour later)
President Trump said Thursday that he will consider hitting China with an additional $100 billion in tariffs, on top of the $50 billion the White House has already authorized, escalating threats of a trade war with the Chinese that his top advisers had tried to minimize a day earlier. WASHINGTON — President Trump said Thursday the United States would consider slapping an additional $100 billion in tariffs on the Chinese, on top of the $50 billion the White House has already authorized, escalating a trade dispute with China.
In a statement late Thursday, Mr. Trump said that he was responding to China’s “unfair retaliation” against the United States, which this week outlined hundreds of Chinese products, like flat-screen TVs and medical devices, that could be subject to American tariffs. The Chinese, in response, detailed their own list of $50 billion worth of American products, like soybeans and pork, that would be hit with levies. Mr. Trump said in a statement that he was responding to “unfair retaliation” by China, which published a list on Wednesday of $50 billion in American products that would be hit by tariffs, including soybeans and pork, a direct reaction to the $50 billion in tariffs on Chinese goods that the White House detailed on Tuesday.
“Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers,” Mr. Trump said, adding that he has instructed the United States trade representative to determine if another $100 billion in tariffs were warranted and, “if so, to identify the products upon which to impose such tariffs.”“Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers,” Mr. Trump said, adding that he has instructed the United States trade representative to determine if another $100 billion in tariffs were warranted and, “if so, to identify the products upon which to impose such tariffs.”
Mr. Trump’s threat of additional tariffs is a marked escalation of a trade dispute that could have global economic ramifications and derail the economic expansion underway. The threat came one day after some of Mr. Trump’s advisers tried to calm markets and tamp down fears of a trade war between the world’s two largest economies, saying that the tariff threats were just the first step in a negotiation process. Mr. Trump said in his statement that the potential for new tariffs would not preclude discussions with the Chinese “to protect the technology and intellectual property of American companies and American people,” but the threat of new tariffs is unlikely to make that already tough task any easier.
The move is a high-stakes gamble aimed at cowing China into backing down from its threat and to force it to make the kinds of changes that the United States is seeking — namely reducing the coercive tactics American officials say Beijing uses to try to dominate leading-edge industries. But the move could ultimately bring about the kind of escalating retaliation from Beijing that has spooked stock markets.
Ben Sasse, a Republican senator from Nebraska, said Mr. Trump was “threatening to light American agriculture on fire.”
“Hopefully the president is just blowing off steam again, but if he’s even half-serious, this is nuts,” Mr. Sasse said. “Let’s absolutely take on Chinese bad behavior, but with a plan that punishes them instead of us. This is the dumbest possible way to do this.”
A trade war between China and the United States could derail the current global economic expansion and cripple American businesses that depend on trade with China. It could also further complicate geopolitical priorities given the Trump administration has enlisted the help of the Chinese in scheduling historic talks with North Korea next month.
In a statement, Robert Lighthizer, the trade adviser who is carrying out an investigation into Chinese practices, described the president’s threat as “an appropriate response,” saying China should have responded to the initial tariffs levied by the United States by changing its behavior.
In the first hint of the Chinese government’s response to Mr. Trump’s latest action, the Weibo miniblog of the official Xinhua news service said that “this move severely violates world trade regulations.”
Zhu Guangyao, China’s vice minister of finance, made clear at a news conference on Wednesday afternoon that his country would not back down lightly. “If anyone wants to fight, we’ll be there with them. If he wants to negotiate, the door is open,” Mr. Zhu said.
Mr. Trump’s effort to raise the stakes on Thursday seemed poised to send financial markets spinning, with futures on the Standard & Poor’s 500-index down and the yen climbing against the dollar.
Companies potentially caught in the middle of a trade war called on the Trump administration to back down and try to work with the Chinese.
“The announcement that the administration may issue $100 billion in additional tariffs on Chinese products is irresponsible and destabilizing,” said Dean C. Garfield, the chief executive of the Information Technology Industry Council, which represents companies including Amazon, Apple and IBM. “We call on both sides to halt unproductive and escalatory rhetoric, recognizing that these words and actions have global consequences.”
China experts have questioned whether Mr. Trump’s aggressive negotiating style will leave Chinese leaders with enough political room to make concessions to the Americans. Bowing to the president’s demands could be seen internally as weakness and the changes that the administration wants — reducing China’s dominance in cutting-edge manufacturing and technology — is not something Beijing is likely to agree to.
Wang Shouwen, China’s vice minister of commerce, has repeatedly refused to discuss curbing “Made in China 2025.” The Trump administration contends that the program violates international trade rules that prohibit countries from using subsidies to help exporters and discourage imports. Mr. Wang and other officials deny that the program is in violation, but have provided few details on how it might comply.
Including this most recent action, the United States would be placing tariffs on a total of $153 billion of Chinese products. The threat of $100 billion in tariffs came on top of the tariffs on $3 billion in Chinese steel and aluminum that he imposed last month and the tariffs on a further $50 billion in Chinese goods that he has threatened to impose in recent days.
The total of these three actions is now so large that China would have trouble finding enough American goods to penalize if it sought to impose a proportional retaliation. China only bought $130.4 billion worth of American goods last year, while the United States bought $505.6 billion worth of Chinese goods.
“China can’t respond in kind even if it places higher tariffs on every nickel of U.S. exports, as U.S. goods exports to China were only $130.4 billion,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies. “So now we’ll need to see if China makes some sort of retaliatory pledge or tries another avenue.”
But China would still have many other options for retaliation. It could limit the operations of American banks and other services providers in China. It could urge the Chinese public not to buy American-brand cars like Chevrolets and Fords, even though these are built now almost entirely from Chinese-made parts and assembled in car factories in China.
The biggest question would be whether China would start retaliating not commercially but through geopolitical actions. While Trump administration trade officials appear to have been operating with considerable autonomy from those responsible for issues like North Korea and Taiwan, policymaking is much more unified in China.
That means China could try to raise the temperature in the dispute by installing more military equipment on the artificial islands that it has recently built across the South China Sea, almost to the shores of Indonesia, Malaysia and the Philippines.
China could also step up pressure on Taiwan; Beijing leaders are already deeply upset about recent Congressional approval of the Taiwan Travel Act, which urged Mr. Trump to send administration officials to the self-governing island. Beijing regards Taiwan as a breakaway province, and has threatened to use force to reunite it.
Chinese experts have made clear that they perceive the ever-larger rounds of American tariffs as part of a broad American challenge that goes beyond dollars and cents. “It is more than just a trade issue: it involves geopolitical reasons,” said Wu Xinbo, the chief of the Center for American Studies at Fudan University in Shanghai, in an interview earlier this week. “Trump has mentioned before, if China doesn’t agree on economy and trade, the U.S. will reconsider China issues — that includes the South China Sea and Taiwan.”
Mr. Trump’s threat to retaliate with $100 billion in tariffs for China’s retaliation on Wednesday with $50 billion in tariffs fits the classic model of a tit-for-tat spiral toward a trade war.
President Xi Jinping of China is scheduled to give a major speech on Tuesday at the Bo’ao Forum on China’s Hainan island, which may give more clues to China’s response. The speech has been billed by other Chinese officials as a moment when Mr. Xi would lay out a blueprint for China’s economic reform and liberalization, a potential peace offering to the Trump administration, Mr. Kennedy said.
“President Trump’s move may throw a small monkey wrench into Xi’s plans,” Mr. Kennedy said. “He may now need to couple such a proposal with the warning that China will continue to defend itself against foreign pressure.”