U.S. President Donald Trump on Sunday threatened to increase tariffs on US$200-billion in Chinese goods on Friday and impose levies on hundreds of billions of dollars of additional imports “shortly,” a move that appeared to be aimed at forcing China to agree to a final trade deal as soon as this week.
Chinese negotiators arrive in Washington this week for what many both inside and outside the administration have said could be a final round of talks to produce a trade agreement – at least in principle.
Treasury Secretary Steven Mnuchin, who made a quick trip to Beijing last week, has expressed optimism about the trade talks, which he said are in “final laps.” Outside advisers to the White House have said a deal is more likely than not.
But in a tweet on Sunday, Mr. Trump said talks were progressing “too slowly” and suggested that the Chinese were attempting to renegotiate the deal. Mr. Trump repeated a threat to raise the rate on existing tariffs and tax nearly all of China’s exports to the United States.
“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods,” Mr. Trump said.
“These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%.”
“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” he added.
It remains to be seen how the Chinese will respond to Mr. Trump’s threats. Chinese leaders have been keen to reduce Mr. Trump’s tariffs, which have taken a toll on their economy. But analysts have also emphasized that the Chinese president, Xi Jinping, does not want to appear to be kowtowing to Mr. Trump’s demands.
The United States has been pressing for a trade deal that would open up business opportunities in China for U.S. companies, require China to buy more U.S. goods and end its practice of forcing American firms to hand over valuable technology and trade secrets as a condition of doing business there. China, for its part, has been pushing for the United States to roll back all – or at least the bulk – of Mr. Trump’s tariffs.
That has proved to be a sticking point. The United States wants the tariffs to come off slowly, as China meets certain bench marks and it may keep tariffs on US$50-billion worth of goods in place indefinitely.
Under the Trump administration, the United States increased tariffs on roughly half of its imports from China last year, while China retaliated with tariffs on more than 70 per cent of its imports from the United States, according to tracking by Chad Bown, a senior fellow at the Peterson Institute for International Economics.
Those tariffs have weighed heavily on businesses that source and sell products in the two major economies.
Mr. Trump said on Sunday that his tariffs have had little impact on product costs in the United States and have been “mostly borne by China,” an argument most economists dispute. Several studies released in recent months have showed that tariffs are being passed on to American consumers in the form of higher prices on imported goods.
U.S. businesses say they support the administration’s efforts to press for a more level playing field in China, but they also complain that the tariffs have stung, said Tim Stratford, the chairman of the American Chamber of Commerce in China.
“Nobody in the business community likes the tariffs,” he said. “They hurt the people that impose them just as much as people they are imposed on.”