US President Donald Trump has threatened to raise tariffs on China. Photo/Getty Images.
US President Donald Trump has threatened to raise tariffs on China. Photo/Getty Images.
US president Donald Trump has threatened to raise tariffs on all Chinese imports to 25 per cent, sharply ratcheting up pressure on Beijing to make concessions in a make-or-break round of trade negotiations set for this week.
In a pair of tweets on Sunday, Mr Trump said that levies imposedon Chinese goods over the past year as part of the trade war with Beijing were "partially responsible for our great economic results" and had "little impact on product cost".
He added that the current 10 per cent tariffs on $200bn of Chinese goods would rise to 25 per cent on Friday, and that $325bn of additional Chinese goods that were currently "untaxed" would "shortly" be subject to tariffs of 25 per cent.
"The Trade deal with China continues, but too slowly, as they attempt to renegotiate. No!," Trump wrote.
The aggressive tweets from Trump mark a big shift in rhetoric from the US president on the trade negotiations with China, compared with consistently upbeat remarks about the state of the talks in recent weeks.
US business groups, which have mostly been pushing for a deal to end the trade war, reacted to Trump's threat of a new escalation with dismay. "We urge the president to refrain from imposing these additional tariffs and instead focus on negotiating and concluding the trade deal with China," said Rick Helfenbein, president of the American Apparel and Footwear Association.
This week, Liu He, China's vice-premier, is set to arrive in Washington for a crucial round of negotiations with Robert Lighthizer, the US trade representative, and Steven Mnuchin, the US treasury secretary. People familiar with the talks have said the goal of this session is to finalise an agreement, setting the stage for a "signing" summit between Trump and Xi Jinping, the Chinese president, possibly in the middle of June.
Chinese Vice Premier Liu He and US President Donald Trump talk with journalists. Photo/Getty Images.
The goal of the negotiators on both sides is to find a settlement to a trade dispute between the two countries that has cast a cloud over the global economy. Liu and Lighthizer have been locked in negotiations since Xi and Trump agreed to try to find a way out of their trade war after the G20 summit in Argentina last summer. However, finding a solution has proved trickier than expected. Both US and Chinese officials have repeatedly delayed the timing of a deal in order to try to get better terms. Originally, Trump had hoped to have the negotiations wrapped up by March. Among the biggest sticking points in the talks is the fate of existing US tariffs on Chinese goods, which Beijing would like to see completely erased but Washington would like to retain in part so that it can keep pressure on China to comply with the deal.
But negotiators have also been haggling on the extent of Chinese concessions on structural economic reforms, with the US side grappling with the reality that Beijing will only go so far in reining in industrial subsidies, intellectual property theft, and its barriers to market access for a variety of industries. It is also unclear how far China will go in committing to large-scale purchases of US goods.
Trump's intervention on Sunday could simply be a classic negotiating strategy to heighten the stakes ahead of the final round of talks, and reassure China hawks in Washington that he will not settle for a weak deal. But they might also point to the US president feeling less pressure to strike a deal, because of the recent rise in equity markets and the strong labour market data, which has diminished fears of a slowdown in the American economy. This could make it more likely that the talks with China could fall apart entirely.
Speaking on Fox News Sunday before Trump's announcement, Mike Pompeo, US secretary of state, said for the US to prevail against China, it would require a "serious concerted effort [and] a president like President Trump, who is prepared to push back against China, whether that be on trade or their military build up or the theft of our intellectual property".
He added: "We need a president who will be serious in protecting America against the challenges that China presents".
Last week, Joe Biden, the former vice-president who has launched a campaign for the Democratic presidential nomination in 2020, challenged the idea that China should be viewed as competition to the US. This drew a rebuke from Trump and renewed a debate about whether engagement or confrontation was the most effective policy towards Beijing.
