Trump Admin Readies More Tariffs Ahead of G-20 Meeting With China
Presidents Donald Trump and Xi Jinping of China are preparing to meet at next month’s G-20 summit to continue negotiating a new trade deal, but that hasn’t stopped the U.S. from readying a list of an additional $300 billion worth of Chinese imports to hit with tariffs.
The U.S. Trade Representative’s office released a list of Chinese goods late Monday including children’s clothing, toys, mobile phones and laptops the Trump administration is threatening with 25% tariffs. The latest round of tariffs would essentially place levies on all Chinese imports.
After the market cratered on Monday due to the recent trade strife, Trump took an optimistic tone to Twitter on Tuesday morning to try and assuage fears on Wall Street.
“China buys MUCH less from us than we buy from them, by almost 500 Billion Dollars, so we are in a fantastic position. Make your product at home in the USA and there is no Tariff. You can also buy from a non-Tariffed country instead of China,” he tweeted. “Many companies are leaving China so that they will be more competitive for USA buyers. We are now a much bigger economy than China, and have substantially increased in size since the great 2016 Election. We are the “piggy bank” that everyone wants to raid and take advantage of. NO MORE!
“We can make a deal with China tomorrow, before their companies start leaving so as not to lose USA business, but the last time we were close they wanted to renegotiate the deal. No way! We are in a much better position now than any deal we could have made. Will be taking in Billions of Dollars, and moving jobs back to the USA where they belong. Other countries are already negotiating with us because they don’t want this to happen to them. They must be a part of USA action. This should have been done by our leaders many years ago. Enjoy!”
Of course, Trump’s tweets should be taken with a grain of salt because, as he claims, the U.S. is not “taking in Billions of Dollars” from the tariffs, which are ultimately passed on to and paid by U.S. consumers and not China — not directly at least, as Trump makes it sound.
Trump’s top economic adviser, Larry Kudlow, confirmed in an interview Sunday on Fox News that China does not directly pay tariffs on goods coming into the U.S., breaking with what the president has repeatedly claimed.
“Our country can take in $120 billion a year in tariffs, paid for mostly by China, by the way, not by us,” Trump said on May 9. “A lot of people try to steer it in a different direction. It’s really paid — ultimately, it’s paid for by — largely, by China.”
Kudlow was pressed on this issue by host Chris Wallace.
“It’s not China that pays tariffs,” Wallace said. “It’s the American importers, the American companies that pay what, in effect, is a tax increase and oftentimes passes it on to U.S. consumers.”
Kudlow said that, yes, Americans pay the tariffs but both sides are damaged.
“Fair enough. Both sides, both sides will pay,” he said. “No, (the Chinese aren’t paying), but they’ll suffer GDP losses and so forth with respect to a diminishing export market and goods that they may need.”
Wallace continued pushing Kudlow and he again admitted that the costs of the tariffs are passed on to U.S. consumers, but added that “this is a risk we should and can take without damaging our economy in any appreciable way.”
Nevertheless, Trump said a deal with China will be made “when the time is right,” praised China’s Xi and again stated that the U.S. is taking in “massive Tariffs being paid to the United States.”
“When the time is right we will make a deal with China. My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn’t make any sense,” he tweeted. “We have to be allowed to make up some of the tremendous ground we have lost to China on Trade since the ridiculous one sided formation of the WTO. It will all happen, and much faster than people think! This money will come from the massive Tariffs being paid to the United States for allowing China, and others, to do business with us. The Farmers have been ‘forgotten’ for many years. Their time is now!”
To end the Tuesday morning tweet storm, Trump again called upon the Fed to lower interest rates because China will do the same.
“China will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business they are, and will be, losing,” he tweeted. “If the Federal Reserve ever did a ‘match,’ it would be game over, we win! In any event, China wants a deal!”
Trump’s more conciliatory tone sparked a mini rally in early trading as the S&P 500 and Dow were both up 0.4% and the Nasdaq was up 0.6% shortly after the market opened.