Another shot fired in China trade fuss
Trump thinking of tariff addition
President Donald Trump ordered his administration to consider imposing tariffs on an additional $100 billion in Chinese imports, a salvo that sent U.S. stock futures tumbling on concern the world’s two largest economies were hurtling toward a full-blown trade war.
The move threatens to unravel efforts by top U.S. and Chinese trade officials to lower the heat and reach an agreement that could stave off an escalating conflict.
U.S. stock futures dropped on Trump’s latest trade directive. S&P 500 Index futures slid as much as 1.6 percent, after the underlying gauge ended up 0.7 percent on Thursday.
“In light of China’s unfair retaliation, I have instructed the U.S. trade representative to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs,” Trump said in a statement issued by the White House.
A White House official later said the $100 billion figure Trump used in the statement referred to the value of the imports that would be covered by the additional tariffs, not the total amount of tax that would be charged on the products.
Trump showed no sign of backing down after the U.S. on Tuesday threatened to impose tariffs on $50 billion in imports from the Asian country for alleged violations of intellectual-property rights. China responded Wednesday with plans to levy tariffs on U.S. products.
“You have to go after the people who aren’t treating you right,” Trump said in West Virginia. “We’re going to have a fantastic relationship long term with China but we have to get this straightened out, we have to have some balance.”
Top White House economic adviser Larry Kudlow has spent recent days trying to calm investors who are concerned the spat will spark a trade war, saying on Thursday the administration was involved in “delicate negotiations” that might forestall the need for tariffs. He said the U.S. could still reach a deal with China, in part by persuading other major economies to call out the Asian nation for unfair trading practices.
“I call it a trade coalition of the willing,” he said. “Everybody in the world knows that China has not played by the rules for many years.”
Speaking shortly after Kudlow on Thursday, White House trade adviser Peter Navarro also said there’s room to make a deal. Talks with China will occur during the 60day period before tariffs take effect, when Americans can provide the government with feedback on the proposed trade measures.
Led by Treasury Secretary Steve Mnuchin and trade representative Robert Lighthizer, discussions with China will focus on trying “to get to some place where China stops doing what it’s doing in terms of its aggressive attacks on our economy,” Navarro told CNBC. He didn’t offer more specific details on the timing or location for negotiations.
Navarro’s comments were the first indication that talks will take place at some of the highest levels of the U.S. government. Some U.S. economic officials are already engaged in discussions with their Chinese counterparts, according to a person familiar with the matter.
Kudlow gave no indication of how soon the negotiations could bear fruit.
Republican Sen. Ben Sasse of Nebraska was critical of the president’s latest move.
“Hopefully the president is just blowing off steam again, but if he’s even half-serious, this is nuts,” Sasse said in a statement Thursday night. “The president has no actual plan to win right now. He’s threatening to light American agriculture on fire.”
Jamie Dimon, JP Morgan Chase chief executive, said Thursday that the U.S. has legitimate grievances with China on trade, but that “anything that starts to resemble a trade war” will pour risk and uncertainty into the global economic system.
Dimon laid out his prescription for solving the debacle in a letter to shareholders Thursday. The U.S. should set a specific timeline for talks, explain what it hopes to achieve, and stay engaged with both China and allies to avoid the worst outcomes, he said. Resolution of “serious trade issues” would be good for the U.S. and the rest of the world, Dimon wrote.
“We should acknowledge many of the legitimate complaints around trade,” Dimon said. “Tariffs and non-tariff barriers to trade are often not fair; intellectual property is frequently stolen; and the rights to invest in and own companies in some countries, in many cases, are not equal.”
While Dimon has clashed with Trump on issues including trade and immigration, he has supported some of Trump’s other initiatives, including the corporate tax cut that passed in December and his stance on regulations. In his letter, the CEO said that it may be a natural reaction in a time of upheaval “to build walls,” but the U.S. needs to stay engaged with the international community more than ever.
China’s threat to raise tariffs on U.S. exports could be a disaster for American soybean farmers but a boon to their Brazilian and Argentine competitors, European aerospace companies and Japanese whiskey distillers.
Chinese regulators picked products China can get elsewhere when they made a $50 billion list including soybeans, corn, wheat and small aircraft for possible retaliation.
The two sides have not set a date for raising duties. Trump has approved higher duties on Chinese telecoms, aerospace and other technology goods but left time to negotiate by announcing a comment period through May 11. China said that its timing depends on what Trump does.
The biggest impact of higher Chinese duties would fall on American soybean farmers. China accounted for almost 60 percent of their exports and $12.4 billion in revenue for the year that ended on Aug. 31.
Farmers in Brazil, Argentina or Australia might step up to supply Chinese buyers who use soybeans as animal feed and to produce cooking oil.
A 25 percent price increase for American pork, whiskey and tobacco could make sources in Europe, Russia, Japan and elsewhere more attractive.
Information for this article was contributed by Randall Woods, Kevin Cirilli, Andrew Mayeda, Saleha Mohsin, Hugh Son, Toluse Olorunnipa, Andrew Mayeda, Alan Bjerga and Adam Haigh of Bloomberg News and by Joe McDonald, Sam McNeil and Yu Bing of The Associated Press.