Trump warns of Plan B on China trade: Billions of dollars more in tariffs

Mr Donald Trump has previously said he may decide to raise tariffs on the remaining US$300 billion (S$407 billion) of Chinese imports if he does not like what he hears from his Chinese counterpart Xi Jinping in Osaka.
Mr Donald Trump has previously said he may decide to raise tariffs on the remaining US$300 billion (S$407 billion) of Chinese imports if he does not like what he hears from his Chinese counterpart Xi Jinping in Osaka.PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - US President Donald Trump said substantial additional US tariffs would be placed on goods from China if there's no progress on a trade deal after his planned meeting with his Chinese counterpart Xi Jinping at the Group of 20 Summit in Japan.

"My Plan B with China is to take in billions and billions of dollars a month and we'll do less and less business with them," Mr Trump said on Wednesday (June 26) during an interview with Fox Business Network's Maria Bartiromo.

The White House announced that his meeting with President Xi would take place at 11.30am on Saturday in Osaka.

Mr Trump has previously said he may decide to raise tariffs on the remaining US$300 billion (S$407 billion) of Chinese imports if he does not like what he hears from Mr Xi at this weekend's summit in Osaka.

Asian stocks advanced on Thursday on optimism that Mr Trump and Mr Xi would reach a truce at their highly anticipated meeting.

The President's latest remarks added an element of doubt to Treasury Secretary Steven Mnuchin's comment earlier on Wednesday on CNBC that he is hopeful about US-China trade negotiations.

An alternate course as the trade talks resume may be that US suspends the next round of tariffs on the additional US$300 billion of Chinese imports, Bloomberg reported on Tuesday.

 
 
 
 

If the tariffs on the broader set of goods do go into effect, it could be at a 10 per cent rate rather than 25 per cent, Trump said in the television interview on Wednesday.

"My plan B's maybe my plan A, my plan B is that if we don't make a deal I will tariff, and maybe not at 25 per cent, but maybe at 10 per cent," Mr Trump said in the interview on Wednesday.

Mr Trump criticised a range of trading partners in the interview, including Germany and Vietnam, which he called an "abuser" when responding to a question about companies relocating production from China to that country following US-imposed tariffs.

Mr Trump later took a shot at India, saying on Twitter that he would ask Prime Minister Narendra Modi to withdraw an unacceptable increase in tariffs on US goods. It was his first direct response to India's move earlier this month to raise tariffs on a slew of products from walnuts to pulses, which was delayed since last year as Mr Modi sought talks.

In the Fox Business interview, Mr Trump said he likes China and Mr Xi, but added: "They have taken advantage of us for so long. They devalue their currency like a ping-pong ball."

Mr Xi comes to Osaka with a more vulnerable economy behind him. The expansion in the world's second-largest economy continued to weaken in June, according to a Bloomberg Economics gauge of business conditions and market sentiment. In particular, the smaller-scale, private companies that form the backbone of the economy are seeing their outlook worsen.

The talks between the leaders of the world's two largest economies mark a critical juncture in their trade war, which has gone on for more than a year, and both sides have plenty to lose if it escalates.

No detailed trade deal is expected from the leaders' summit, a senior US administration official said on Tuesday. The goal of the meeting is to create a path forward for a trade agreement, after negotiations broke down last month. That was when Mr Trump decided to increase tariffs on US$200 billion in Chinese imports, and threatened to target the remaining US$300 billion with duties of as much as 25 per cent.