Trump threatens China with more tariffs
WASHINGTON — With President Donald Trump intensifying his rift with U.S. trading partners, economists are growing more doubtful that any deal that might benefit American workers and companies is in sight.
Instead, many analysts say they expect the Trump administration to impose more tariffs on China and potentially other key U.S. trading partners. With those nations almost certain to retaliate, the result could be higher prices for Americans, diminished export sales and a weaker U.S. economy by next year.
In an interview with CNBC that aired Friday morning, Trump renewed his threat to ultimately slap tariffs on a total of $500 billion of imports from China — roughly equal to all the goods Beijing ships annually to the United States. The president has already imposed tariffs on $34 billion in Chinese goods, and Beijing has retaliated with tariffs on an equal amount of American exports. The White House also has itemized $200 billion of additional Chinese imports that it said might be subject to tariffs.
In addition, Trump has told the Commerce Department to investigate whether imported autos and auto parts threaten America’s national security. If the answer is yes, the administration says it could slap 20 percent to 25 percent tariffs on $335 billion of auto imports.
Analysts say they’re becoming more convinced that Trump’s multifront trade fights aren’t merely a shortterm negotiating ploy. Rather, he might be prepared to wait as long as he feels it necessary to force other countries to adopt trade rules more favorable to the United States.
Moody’s Analytics estimates that if the tariffs were imposed on autos and most Chinese imports and other countries retaliate as expected, annual U.S. growth would slow by half a percentage point by mid-2019. It expects 700,000 jobs would be lost.
Global markets have remained generally calm despite the eruption of a fullblown U.S.-China trade war and the other conflicts Trump has ignited. On Friday, the Dow Jones industrial closed down slightly.
WASHINGTON — Bowing to White House demands, Senate Republicans have backed off their attempt to reimpose U.S. sanctions on the Chinese telecommunications giant ZTE, a congressional source said Friday.
The retreat means that ZTE — a company found guilty of selling U.S. goods to Iran in violation of sanctions — will get to duck tough Commerce Department penalties that bar U.S. companies from doing business with it. Chinese officials said those penalties would effectively put ZTE out of business.
President Donald Trump had ordered his own Commerce Department to lift the penalties, but senators wanted to reimpose them as part of a sweeping defense-policy bill to be unveiled next week. They have now agreed to language advanced by the House instead, which bars government contractors from doing business with ZTE but allows the company to continue doing business with private U.S. firms, according to a source who spoke on the condition of anonymity.
“I’ve been surprised that up until now, markets seem overly sanguine about the risks” of a trade war between the world’s two biggest economies, said David Dollar, senior fellow at the Brookings Institution and a former official at the World Bank and U.S. Treasury Department.
Investors as a whole appear to accept the argument of Trump economic advisers, notably Larry Kudlow and Kevin Hassett, that the president’s threats will likely force China, the European Union,
Canada and Mexico to negotiate better trade deals.
But many analysts are skeptical that Trump’s tactics will produce such an outcome. Rufus Yerxa, president of the National Foreign Trade Council and formerly deputy director general of the World Trade Organization, said Trump appears to think that America’s trading partners will yield to pressure without securing any concessions in return.
After Beijing offered to buy more natural gas and farm goods from the U.S. to narrow the trade deficit, Treasury Secretary Steven Mnuchin said the trade war was “on hold.” China also said it would reduce its auto tariffs from 25 percent to 15 percent.
Yet Trump soon intensified his tariff threats.
The administration says it wants China to end the theft of intellectual property from U.S. companies and curb policies that require American and other foreign businesses to hand over technology in exchange for access to the Chinese market. Yet any such agreement would require extensive talks over how it would be implemented and verified.
Economists note that Trump’s stance on trade runs deep. He has been denouncing other countries’ trade practices and urging retaliation for decades, dating to the 1980s.
“You have to take seriously that (imposing tariffs) is what he really wants to do,” said Adam Posen, president of the Peterson Institute for International Economics.
On CNBC, Trump shrugged off the prospect that a trade war could cause the stock market to tumble.
“If it does, it does,” he said.