Donald Trump prepares more tariffs as China retaliates
Stocks plunged in trading Monday after China announced retaliatory tariffs on U.S. goods and as prospects for a deal to avert a trade war seemed more remote.
China said it will impose higher tariffs on $60 billion worth of American-made products on June 1 as payback for President Trump’s decision last week to jack up U.S. tariffs on Chinese goods to punish Beijing after trade talks fell apart heading into the weekend.
Mr. Trump said Monday that he expected some measure of retaliation but insisted that the U.S. is ready to withstand China’s move.
“I love the position we’re in,” Mr. Trump told reporters at the White House just before meeting with Hungarian Prime Minister Viktor Orban.
The stock market, however, did not like the position. The Dow Jones Industrial Average lost more than 2% of its value, dropping by over 617 points to close at 25,324.99, with poor performance from stocks for companies such as Boeing and Apple, which rely on Chinese trade. The Standard Poors 500 and Nasdaq Composite indexes sustained similar losses, dropping by, respectively, 2.4% and 3.4%.
Mr. Trump, unbowed, said the U.S. could up the ante by imposing import taxes on another $325 billion worth of Chinese goods. The Washington Post reported Monday evening that the Office of the U.S. Trade Representative had begun to prepare those levies.
He argued that the U.S. is reaping “billions” through tariffs, so he may impose additional levies even as Republican allies and American farmers urged him to find an acceptable way out of the trade war.
Senate Finance Committee Chairman Chuck Grassley, Iowa Republican, implored both countries to strike a deal. He noted the dispute’s impact on farmers back home.
“Increasing U.S. tariffs on Chinese products and the retaliatory tariffs from China will hurt both countries. This intensifies the urgency of reaching an agreement as soon as possible to end this trade war,” he said.
“Americans understand the need to hold China accountable,” he said, “but they also need to know that the administration understands the economic pain they would feel in a prolonged trade war.”
Mr. Trump said some of the money the government is raising as a result of the tariffs will be used to help farmers and hinted at a $15 billion assistance package.
“They’ll be planting, they’ll be able to sell for less and they’ll make the same kind of money, until such time as it’s all straightened out,” Mr. Trump said. “So our farmers will be very happy, our manufacturers will be very happy and our government is very happy, because we’re taking in tens of billions of dollars. I think it’s working out very well.”
Americans have complained for years that the Chinese steal U.S. technology and demand trade secrets to gain leverage. Mr. Trump argues that he is finally doing something about it and that there are ways around the pain.
“In the old days, we made our product and we took our product, and that’s what it was. Now we go to China, and we buy it not anymore,” he said. “If they don’t want to pay tariffs, make it here or buy it from another country that’s a non-tariffed country.”
Lawmakers and business leaders are skittish, however. They say American consumers bear the brunt of costs passed down when the U.S. government raises tariffs despite Mr. Trump’s assertion that China is shoveling money into U.S. coffers.
The American Soybean Association said Monday that its members are fed up with tit-for-tat tariffs and that it’s time to discuss alternative levers.
“The U.S. has been at the table with China 11 times now and still has not closed the deal. What that means for soybean growers is that we’re losing losing a valuable market, losing stable pricing, losing an opportunity to support our families and our communities,” said association President Davie Stephens, a soy grower from Clinton, Kentucky.
Mr. Trump directly blamed China for the sudden impasse. He said a trade pact was “95% there” before the other side reneged on previously negotiated aspects. He warned Chinese President Xi Jinping that the situation will only get worse for his country if he continues to push back.
“China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China,” Mr. Trump said in a series of Twitter posts. “You had a great deal, almost completed, you backed out!”
Hours later, Mr. Trump said he plans to meet with Mr. Xi during the Group of 20 summit in Japan next month. “That’ll be, I think, probably a very fruitful meeting,” he said.
Mr. Trump also said he will meet with Russian President Vladimir Putin and deliver a complex message.
“There has never been anybody that’s been so tough on Russia but, at the same time, we’re going to end up getting along with Russia. It makes sense to get along with Russia,” he said.