Trump, China escalate trade dispute as markets fall
Washington — Unwilling to yield, President Donald Trump and China’s government escalated their trade clash Friday, with Beijing vowing to “counterattack with great strength” if Trump follows through on threats to impose tariffs on an additional $100 billion in Chinese goods.
Trump made his out-of-the-blue move when China threatened to retaliate for the first round of tariffs planned by the United States. But for someone who has long fashioned himself as a master negotiator, Trump left it unclear whether he was bluffing or willing to enter a protracted trade war pitting the world’s two biggest economies against each other, with steep consequences for consumers, businesses and an already shaken stock market.
“They aren’t going to bully him into backing down,” said Stephen Moore, a former Trump campaign adviser who is now a visiting fellow at the Heritage Foundation. He said the Chinese “are going to have to make concessions — period.”
The White House sent mixed signals on Friday as financial markets slid from investor concern about a significant trade fight. Treasury Secretary Steven Mnuchin told CNBC he was “cautiously optimistic” that the U.S. and China could reach an agreement before any tariffs are implemented but added, “there is the
potential of a trade war.”
White House economic adviser Larry Kudlow told reporters the U.S. was “not in a trade war,” adding, “China is the problem. Blame China, not Trump.”
Trump’s latest proposal intensified what was already shaping up to be the biggest trade battle for more than a half century. The U.S. bought more than $500 billion in goods from China last year and now is planning or considering penalties on some $150 billion of those imports. The U.S. sold about $130 billion in goods to China in 2017 and faces a potentially devastating hit to its market there if China responds in kind.
Global financial markets have fallen sharply as the world’s two biggest economies squared off — the Dow Jones industrial average sank 572 points Friday.
Trump told advisers Thursday he was unhappy with China’s decision to tax $50 billion in American products, including soybeans and small aircraft, in response to a U.S. move this week to impose tariffs on $50 billion in Chinese goods.
Rather than waiting weeks for the U.S. tariffs to be implemented, Trump backed a plan by Robert Lighthizer, his trade representative, and was encouraged by Peter Navarro, a top White House trade adviser, to seek the enhanced tariffs, upping the ante.
White House chief of staff John Kelly and Mnuchin concurred with the move, as did Kudlow, who traveled with the president to West Virginia.
China said negotiations were impossible under the circumstances but Trump officials said the president and his team remained in contact with President Xi Jinping and expressed hope to him of resolving the dispute through talks. White House press secretary Sarah Huckabee Sanders said the two sides remained in “routine contact.”
In Beijing, a Commerce Ministry spokesman said China doesn’t want a trade war — but isn’t afraid to fight one.
“If the U.S. side announces the list of products for $100 billion in tariffs, the Chinese side has fully prepared and will without hesitation counterattack with great strength,” spokesman Gao Feng said. He gave no indication what measures Beijing might take.
Trump has also pushed for a crackdown on China’s theft of U.S. intellectual property, and he criticized the World Trade Organization, an arbiter of trade disputes, in a tweet Friday for allegedly favoring China. Trump asserted the WTO gives the Asian superpower “tremendous perks and advantages, especially over the U.S.”
U.S. officials have played down the threat of a broader trade dispute, saying a negotiated outcome is still possible. But economists warn that the tit-for-tat moves bear the hallmarks of a classic trade rift that could keep growing. Worry is intensifying among Republicans, who traditionally have favored liberalized trade.