Trump adds to fiery talk of trade war
Treasury chief raises notion of a showdown with China
— President Donald Trump defended his pugnacious approach to trade policy Friday, and the Treasury secretary warned there could be a trade war with China.
Trump also doubled down on a White House plan to punish Beijing by threatening to levy tariffs on an additional $100 billion in imports.
“There is the potential of a trade war,” Steven Mnuchin said in an interview with CNBC. “There is a level of risk that we could get into a trade war.”
Mnuchin said he was hopeful that negotiations with his Chinese counterparts could avert a damaging escalation of retaliatory tariffs but declined to elaborate on the status of talks and whether he thought an agreement could be reached.
Financial markets continued to drop Friday as the potential for a damaging trade dispute — which had begun to fade Wednesday and early Thursday as other top White House advisers tried to soothe markets — reared its head after comments by Trump, Mnuchin and Robert Lighthizer, the U.S. trade representative, suggesting the United States would not back down.
In a radio interview that aired Friday, Trump acknowledged that his approach to China could cause “a little pain” to financial markets but said that it would be worth it in the long run.
“Now we could — the easiest thing for me to do would be just to close my eyes and forget it,” Trump said on WABC Radio’s Bernie & Sid in the Morning show.
“If I did that, I’m not doing my job. So, I’m not saying there won’t be a little pain, but the market’s gone up 40 percent, 42 percent — so we might lose a little bit of it — but we’re going to have a much stronger country when we’re finished. And that’s what I’m all about. We have to do things that other people wouldn’t do.”
Trump told advisers Thursday that 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 Lighthizer and was encouraged by Peter Navarro, a top White House trade adviser, to seek the enhanced tariffs, raising the ante.
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.”
Mnuchin said Friday that a correction was normal after such a long stretch of rising stock prices. He insisted that Trump’s trade policy would be good for economic growth and that he was not concerned about daily declines in stocks.
“I think these are all longterm positive things that the president is willing to defend our interests,” Mnuchin said.
Serious talks “have not really begun yet,” Larry Kudlow, head of the White House National Economic Council, told Bloomberg TV.
“We haven’t yet given China a list of demands on what we want,” Kudlow told reporters later on Friday at the White House. “We haven’t done that but such a list is under discussion.” The U.S. and China are holding “back-channel discussions,” Kudlow said, without providing further details on who was involved.
Trump, in a tweet Friday, criticized both China and the World Trade Organization, saying that the Chinese “get tremendous perks and advantages, especially over the U.S. Does anybody think this is fair. We were badly represented. The WTO is unfair to U.S.”
That followed anoth- er early morning tweet, in which Trump boasted that the new metals tariffs he has put into effect on China and other nations had not hurt U.S. consumers as his critics predicted.
“Despite the Aluminum Tariffs, Aluminum prices are DOWN 4%,” Trump wrote. “People are surprised, I’m not! Lots of money coming into U.S. coffers and Jobs, Jobs, Jobs!”
The price of aluminum per pound has been falling since February, a decline that started before the tariffs were imposed. Trump’s decision to exempt Canada, which supplied more than half of U.S. aluminum imports in 2016, also has helped to soften the blow from tariffs, companies say.
The president’s criticism of the World Trade Organization is not new — many of his top advisers have complained that its process for reviewing and resolving trade disputes has put the United States and Western countries at a disadvantage.
But the United States has said it will take its complaint about Chinese trade practices, including the tactics it uses to gain access to U.S. intellectual property, to the global body as part of the sweeping trade action the White House announced last month. That
White House investigation found that China cheats the United States out of $50 billion annually through pressure and other coercive measures aimed at gaining access to U.S. technology.
On Friday morning, the White House issued an additional statement defending the president’s actions.
“Year after year, China continues to distort global markets and harm U.S. businesses and consumers with unfair trade practices,” the press office said.
But the approach has come under swift and stinging criticism from lawmakers of both parties, as well as industries whose businesses depend on access to China’s markets.
Sen. Heidi Heitkamp, D-N.D., called Trump’s actions “reckless,” saying in a tweet that 60 percent of her state’s exports to China are agricultural products. “China’s unfair trade policies need to be reined in but this isn’t the way to do it.”
“This is what a trade war looks like, and what we have warned against from the start. We are on a dangerous downward spiral, and American families will be on the losing end,” Matthew Shay, president and chief executive of the National Retail Federation, said in a statement. “We urge the administration to change course and stop playing a game of chicken with the nation’s economy.”
Federal Reserve Chairman Jerome Powell said Friday that some business executives have begun to express concerns to Fed officials about the effect of a possible trade war with China.
In an appearance before the Economic Club of Chicago, Powell said the issue was discussed at the Fed’s March meeting. He said while business executives were saying that rising trade tensions had become a bit of a risk to the economic outlook, Fed officials felt it was too early to determine what the impact will be in such areas as inflation.
In response to a question, Powell said “tariffs can push
up prices but … it is too early I think to really say whether that is going to be something that happens or not.”
China was celebrating a national holiday Friday and did not immediately announce any concrete action against the president’s threat of an additional $100 billion in tariffs. A spokesman said the Chinese Ministry of Commerce had “taken note” of the White House’s statement, adding that “the Chinese position has been made very clear. We do not want to fight, but we are not afraid to fight a trade war.”
If the United States follows through with its threats, the Chinese “will follow suit to the end and will not hesitate to pay any price,” he said, arguing that the United States initiated the conflict.
In the meantime, the trade measures ignited a swift response from manufacturers, retailers and politicians from states whose economies depend on agriculture. Although China exports far more to the United States than it imports, China is still the United States’ third-largest export market after Canada and Mexico, a vital destination for U.S.-made goods like Boeing airplanes, luxury automobiles and soybeans.
“Hopefully, the president is just blowing off steam again, but if he’s even half-serious, this is nuts,” Sen. Ben Sasse, R-Neb., said Thursday. “Let’s absolutely take on Chinese bad behavior, but with a plan that punishes them instead of us. This is the dumbest possible way to do this.”
Information for this article was contributed by Ana Swanson and Eileen Sullivan of The New York Times; by Andrew Mayeda and Toluse Olorunnipa of Bloomberg News; and by The Associated Press.