Trump Renews Trade War as China Talks End Without a Deal

WASHINGTON — Trade talks between China and the United States ended on Friday without a deal, just hours after President Trump renewed his trade war with China by raising tariffs on $200 billion worth of imports and suggesting he was prepared for a long economic fight.

In a series of early morning tweets, the president said tariffs on Chinese goods would bolster the United States economy and warned that he would tax nearly all Chinese imports if Beijing did not accede to America’s demands. His comments, which came just ahead of talks between the two countries, suggested Mr. Trump is willing to prolong his trade war for the foreseeable future.

“Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch!” Mr. Trump added, adding that the Chinese “should not renegotiate deals with the U.S. at the last minute.”

The toughened stance has thrust the world’s two largest economies back into a trade war that just one week ago had seemed on the cusp of ending. Just weeks ago, Mr. Trump was talking about a signing ceremony with Xi Jinping, China’s president, for a trade deal he said would be “epic.” But talks between the United States and China broke down over the weekend, with Mr. Trump and his advisers balking at China’s attempts to renege on parts of an emerging trade agreement.

On Friday, it appeared that the trade dispute was lurching in the direction of an all-out economic war. In addition to raising tariffs to 25 percent on $200 billion worth of Chinese goods, Mr. Trump said his administration is preparing to tax another $325 billion worth of China’s imports. China has threatened to retaliate with its own “countermeasures,” which include ending purchases of American farm goods and erecting other nontariff barriers for companies trying to gain access to the Chinese market.

Steven Mnuchin, Treasury secretary, and Robert Lighthizer, Mr. Trump’s top trade negotiator, greeted the Chinese delegation on the steps of the office of the United States Trade Representative on Friday morning. But talks ended shortly after and the Chinese delegation is expected to return to Beijing on Friday evening.

As he left the talks and headed to the White House, Mr. Mnuchin told reporters that the discussions were “constructive.”

Stock markets fell in early morning trading, with the S&P 500 down more than 1 percent but regained some ground after Mr. Mnuchin’s comments.

It remains uncertain if the two countries can salvage a trade agreement that is complicated by political dynamics on both sides of the Pacific. Mr. Trump, who has promised to be tough on China, is eager to avoid being seen as signing a weak deal that does not take advantage of the leverage the United States has created with its tariffs.

The president said Friday that talks with China continued “in a very congenial manner” but that “there is absolutely no need to rush.”

But Mr. Xi is also facing pressure from hard-liners within China, who do not want to acquiesce to the United States, particularly America’s demands that China make changes to its laws.

Chinese officials said the decision to come to the United States after Mr. Trump’s tariff threat was intended to show they are serious about continuing discussions. But it is unclear whether China is willing to make the changes that the Trump administration is demanding, including codifying much of the agreement into Chinese law.

“I come here facing pressure,” Liu He, China’s vice premier, said on Thursday in an interview with China Central Television in Washington. “That expresses China’s greatest sincerity. And we want to resolve some of the differences we face honestly, confidently and rationally. I think there is hope.”

Mr. Trump continued to insist that his tough approach to China would benefit the United States economy, in part by encouraging more companies to produce goods in America.

Economists have almost uniformly rejected the president’s arguments that tariffs are good for the United States, saying that these taxes reduce economic activity by raising prices for consumers. While the administration set up a $12 billion aid program to help farmers hurt by the trade war, economists say subsidizing farmers is less efficient than opening foreign markets to trade.

“Make no mistake about it, we have already had preliminary discussions in the White House for additional support for farmers if this impasse with China continues,” Mike Pence, the vice president, said in remarks on Thursday in Minnesota.

The United States and China had been nearing a trade deal that would lift tariffs, open the Chinese market to American companies and strengthen China’s intellectual property protections. But discussions fell apart last weekend, when China called for substantial changes to the negotiating text that both countries had been using as a blueprint for a sweeping trade pact. American officials said that China claimed that provisions of the deal would be in violation of Chinese laws — which could not be easily changed — and that the United States was demanding too much and giving too little.

Businesses large and small to braced for fallout, as tariffs on an additional $200 billion of Chinese goods went into effect at 12:01 a.m. Friday morning. The tariffs will apply only to goods that have left China after that time, effectively giving several weeks’ extension for products that are already on ships on the water.

“We are disappointed that the U.S. and China were unable to reach a deal in time to avoid another escalation of tariffs,” said Naomi Wilson, senior director of Asia policy for ITI, a lobbying group for the technology sector.

“This specific tariff increase will affect every day telecommunications equipment like modems and routers that help Americans connect to the internet and with each other.”

Current and former Trump administration officials have cautioned that negotiations between the United States and China have stalled before and then been revived.

Michael Pillsbury, a China scholar at the Hudson Institute who advises the Trump administration on trade, said that the apparent collapse of the talks was a sign that hard-liners are winning the debate in China and pressuring Mr. Xi not to acquiesce to Mr. Trump.

“There is information coming out of Beijing that this is part of a larger move by the hard-liners to persuade Mr. Xi to change a number of policies and to get tougher,” he said.

While Mr. Trump appears to be gambling with the United States economy, confronting China is one issue where Democrats and many Republicans have been encouraging him to remain assertive in hopes that China will make significant changes to its economic policies.

The Republican National Committee defended Mr. Trump on Friday against criticism that he has been unable to close the deal with China.

“While others have acknowledged China’s trade cheating for years and done nothing, President Trump is determined to not let China off the hook until it ends its destabilizing practices,” the R.N.C. said in a statement.

In recent days, Mr. Trump has mocked Democrats and potential 2020 opponents, suggesting that China hopes to wait out his presidency and face a weaker negotiator.

Democrats have largely been quiet about Mr. Trump’s approach to China, but some have said that his confrontational approach has squandered an opportunity to bring about the changes that he seeks.

“The question is how do you use U.S. leadership,” said Jack Lew, who served as Treasury secretary under President Barack Obama. “Do you use it to try to force a major counterpart to capitulate and do it in a humiliating way? Or do you use your moral leadership, which has driven the process forward in the past.”

Source link