Donald Trump signals tougher line after trade talks end
President Donald Trump late on Friday moved closer to imposing tariffs on all imports from China after US and Chinese negotiators failed to reach a deal to end the trade war between the two countries.
Robert Lighthizer, the US trade representative, said Mr Trump had told him to start preparations for imposing tariffs on the roughly $300bn in Chinese goods that are currently not subject to tariffs.
“[The president] ordered us to begin the process of raising tariffs on essentially all remaining imports from China, which are valued at approximately $300bn,” he said in a statement. “Details will be on the USTR website on Monday as we begin the process prior to a final decision on these tariffs.”
Mr Lighthizer disclosed Mr Trump’s request after US and Chinese trade negotiators ended two days of talks in Washington without an agreement. The negotiations had resumed on Friday after Mr Trump at the start of the day had increased tariffs on $200bn on Chinese goods from 10 per cent to 25 per cent.
One person familiar with the talks said China had failed to give much meaningful ground on key sticking points, but both sides felt the need to manage market expectations and avoid the perception of a full breakdown.
In a tweet on Friday afternoon, Mr Trump said: “Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries.
“The relationship between [Chinese] President Xi [Jinping] and myself remains a very strong one, and conversations into the future will continue. In the meantime, the United States has imposed Tariffs on China, which may or may not be removed depending on what happens with respect to future negotiations!”
Neither side said where or when the next round of negotiations would take place.
US financial markets gyrated during the day as investors waited for the results of the talks. After falling as much as 1.6 per cent, the benchmark S&P 500 closed 0.4 per cent higher after Mr Trump and other officials gave their characterisation of the negotiations.
“They were constructive discussions between both parties, that’s all we are gonna say. Thank you,” Steven Mnuchin, the US Treasury secretary, told reporters after the session with Liu He, China’s vice-premier. Mr Liu said the talks had gone “fairly well”, according to Bloomberg News.
The US president’s decision to ratchet up levies on $200bn of Chinese products had raised the stakes for both countries. The economic outlook in the US and China has been brighter than expected in recent months, but many economists fear these improvements could be jeopardised if the trade war intensifies.
While pivoting towards a much more aggressive posture in recent days, the Trump administration has seemed most preoccupied by the fallout for US farmers, a critical part of its political base that has been hit hard by the dispute with China. Mr Trump said the US government would “buy agricultural products from our Great Farmers, in larger amounts than China ever did” — heralding a big round of state subsidies for the US farming sector.
US farmers have already seen a sharp drop in exports to China over the past year due to the trade war and have been begging the administration to reach a deal with Beijing. Last year, the Trump administration put in place a $12bn aid package for farmers to prevent a political backlash, but until this week it had ruled out a new one.
“@POTUS is steadfast in his support for US farmers and directed @USDA to work on a plan quickly. @POTUS loves his farmers and will not let them down!” Sonny Perdue, the US agriculture secretary, wrote in a tweet on Friday morning.
In Beijing, the Chinese commerce ministry said it “deeply regretted” the US president’s decision to increase tariffs on the $200bn in goods and repeated its earlier vow to “take necessary countermeasures”.
The US president decided to press ahead with the higher levies last Sunday as he accused China of walking back commitments, including specific measures to protect US intellectual property — in the negotiations. Some business groups were very unhappy with the move, amid fears that their costs are bound to rise and they will have to pass on some of the pain to consumers.
“We do not believe that broad unilateral tariffs are the right approach. We urge the president to negotiate solutions to the longstanding issues with China, de-escalate economic tensions, and immediately remove the tariffs,” said Kip Eideberg, vice-president of government and industry relations at the Association of Equipment Manufacturers. But others pinned the blame on Beijing as well.
“We . . . remain deeply concerned about recent suggestions that China is backing away from progress made to date,” said Myron Brilliant, the head of international affairs at the US Chamber of Commerce. “The American business community urges the administration and the Chinese government to move forward expeditiously and in good faith to strike a high-standard, comprehensive, enforceable agreement, and end the tariffs now in place. Prolonging trade tensions and the escalation of tariffs are in neither country’s interest.”
The higher US duties will only apply to Chinese goods shipped from Friday onwards — not on products already en route to or in US ports. As most trade between the world’s two largest economies is transported across the Pacific by ship, that gives both sides some extra time — until the end of the month — to negotiate a settlement.
Mr Trump first imposed a punitive tariff of 25 per cent on $50bn worth of Chinese industrial exports in July last year. That was followed in September by the imposition of a 10 per cent tariff on a much broader range of goods worth about $200bn annually, which will now be raised to 25 per cent. In addition, Mr Trump has said the US would start the “paperwork” to apply a 25 per cent rate on all remaining Chinese imports, worth $325bn.
“I happen to think that tariffs for our country are very powerful,” Mr Trump said.
Additional reporting by Greg Meyer in New York