U.S. President Donald Trump insisted on Tuesday that trade talks with China have not collapsed and called the widening U.S.-China tariff war “a little squabble,” even as his administration readies 25 per cent duties on all remaining Chinese imports.
Expanding on a stream of optimistic early morning tweets about the state of talks, Trump told reporters that he has a “very good dialogue” going with China and touted his “extraordinary” relationship with Chinese President Xi Jinping.
“We have a dialogue going. It will always continue,” Trump said. “But we made a deal with China … We had a deal that was very close but then they broke it. They really did.”
Trump appeared to downplay the scope of the trade war, which could lead to tariffs this summer on all trade between the world’s two largest economies, raising costs and disrupting supply chains across the globe.
“We’re having a little squabble with China because we’ve been treated very unfairly for many, many decades,” Trump said, referring to U.S. complaints about Chinese intellectual property and subsidy practices.
Stocks, which took a beating on Monday after Trump late on Friday threatened a new round of tariffs on about $300 billion worth of remaining imports from China, gained strength after Trump’s comments, with the tech-driven Nasdaq up 1.47 per cent in midday trade.
The Dow Jones Industrial average was up 1.28 per cent while the broader S&P 500 was up 1.3 per cent.
Trump earlier tweeted that a deal would happen and appealed to China to buy U.S. farm products.
“When the time is right we will make a deal with China,” Trump said. “It will all happen, and much faster than people think!”
“Hopefully China will do us the honour of continuing to buy our great farm product, the best, but if not your Country will be making up the difference,” he wrote in post addressing U.S. farmers directly.
Trump on Monday said that his administration was planning to provide about $15 billion in aid to help U.S. farmers whose products were targeted by Chinese retaliatory tariffs. He declined to provide details on the plan, which follows $12 billion in U.S. farm aid last year.
Soybeans, the most valuable U.S. crop, bounced off a decade low on Tuesday as the market’s focus shifted to planting delays due to poor weather, which could reduce crop size. Some analysts said the worst of the trade news is already priced in the market.
TARIFFS IN HAND
Trump also said on Monday that he expected to meet with Chinese President Xi Jinping at a G20 leaders summit in Japan in late June.
Based on an accelerated schedule laid out by the U.S. Trade Representative’s (USTR) office late on Monday, Trump will be in a position to launch 25 per cent tariffs on another $300 billion worth of Chinese goods when he meets with Xi, adding potential leverage.
USTR said it would hold a public hearing on the tariff list on June 17, with final comments due as little as seven days later. The list includes a wide range of consumer goods, from cellphones and computers to clothing and footwear, but it excludes pharmaceuticals, some specialty compounds and rare-earth minerals.
As negotiations toward resolving the U.S.-China trade war stalled last week, Trump escalated pressure by increasing tariffs on Friday to 25 per cent from 10 per cent on a previous, $200 billion list of Chinese imports.
China retaliated on Monday with higher tariffs on a revised list of $60 billion worth of U.S. products.
The prospect of the global economy being derailed by the United States and China sliding into a fiercer, more protracted dispute has rattled investors and sparked a sharp selloff on equities markets in the past week.
Some members of Congress who have been supportive of Trump’s tough stance on China expressed concern that the president is escalating tariffs without an exit strategy.
“Let’s be blunt: it’s a tax on the American consumer and the American manufacturer … who’s paying about $1.4 billion a month in new tariffs,” Democratic Senator Chris Coons said in an interview with MSNBC on Tuesday.
In China, the Shanghai Composite Index lost 0.7 per cent and the blue chip CSI 300 fell 0.6 per cent Tuesday but found support after Chinese state-backed purchases..
However, the onshore yuan weakened 0.1 per cent to its lowest level since Dec. 27, 2018, trading at 6.8874 per dollar, after China’s Foreign Ministry said it hoped the United States does not “underestimate China’s determination and will to safeguard its interests.”
“My understanding is that China and the United States have agreed to continue pursuing relevant discussions. As for how they are pursued, I think that hinges upon further consultations between the two sides,” Chinese Foreign Ministry spokesman Geng Shuang told a daily news briefing, without giving details.
Sources have said talks stalled after China tried to delete commitments from a draft agreement that its laws would be changed to enact new policies on issues from intellectual property protection to forced technology transfers.
Geng put the blame on Washington for going back on its word in some previous rounds of talks, including last May, when the two reached an agreement in Washington but then the United States backed out a few days later.
“So you absolutely can’t put the hat on China of reversing positions and going back on one’s promises,” Geng said, adding China had shown goodwill in the talks and kept its promises.