China is opposed to further escalation in the ongoing trade war with the United States, and would rather resolve the tit-for-tat tariffs battle through “calm” negotiations Vice Premier Liu He said Monday, according to a Reuters report.
Liu is leading the talks for China in Washington as we ended last week with major escalations from both sides.
China announced tariffs on $75 billion worth of American imports on Friday, causing yet another massive sell-off on the stock markets. The S&P 500 fell 2.6%, the Dow Jones Industrial Average fell another 2.4% and the Nasdaq tanked 3%, wiping out all of the week’s gains. It was the fourth straight week of losses for the S&P 500, which is down 4.1% for the month of August.
Then late Friday, Trump announced higher tariffs on Chinese imports in retaliation in a series of four tweets, strung together here.
“For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight,” Trump tweeted. “Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship.
“China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%. Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!”
Earlier Friday, Trump appeared to order all U.S. companies to leave China and return to the states or other markets, tweeting “our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME.”
Trump appeared to back down on that statement Sunday. Though, U.S. Treasury Secretary Steve Mnuchin said Trump could order companies out of China under the International Emergency Economic Powers Act if he wants to declare a national emergency, which would clearly be the biggest escalation of the trade war to date.
Liu, per Reuters, said nobody benefits from a trade war.
“We are willing to resolve the issue through consultations and cooperation in a calm attitude and resolutely oppose the escalation of the trade war,” said Liu, who is President Xi Jinping’s top economic adviser.
“We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world.”
He also said U.S. companies are welcome in China and will be treated well.
“We welcome enterprises from all over the world, including the United States, to invest and operate in China,” Liu said. “We will continue to create a good investment environment, protect intellectual property rights, promote the development of smart, intelligent industries with our market open, resolutely oppose technological blockades and protectionism, and strive to protect the completeness of the supply chain.”
While Liu played nice, Chinese state media blasted the U.S. on Monday as the country’s markets and the yuan, China’s currency, fell to an 11-year low.
“It has become unquestionably clear that his administration’s tariff war against China is politically motivated,” the China Daily said in an editorial. “What Washington wants from its largest trade partner is for it to be content to play second fiddle and meekly do as it demands.
“Washington has again taken the initiative to escalate the fight in the hope that Beijing will throw in the sponge as early as possible. But Beijing regards the trade war as an unavoidable trial by fire, from which the country will emerge stronger.”