Trump claims US has upper hand in trade war with China

White House economic director Larry Kudlow has conceded that US importers and consumers, not China, will pay the tariffs imposed by Washington on imported goods. But he said China feels the impact, too, in terms of a hit to its own economic growth.
White House economic director Larry Kudlow has conceded that US importers and consumers, not China, will pay the tariffs imposed by Washington on imported goods. But he said China feels the impact, too, in terms of a hit to its own economic growth.PHOTO: BLOOMBERG

But his economic adviser admits US firms, consumers will pay bill

WASHINGTON • President Donald Trump has weighed in on the state of trade negotiations with China, saying the United States was "right where we want to be" and on the cusp of taking in massive tariffs from China - at odds with his economic adviser, who conceded that US companies and consumers would pay the tariff bill.

In a pair of Twitter posts on Sunday, Mr Trump refloated a plan from last Friday to redirect money generated by the tariffs to buy up American agricultural products and "distribute the food to starving people" worldwide - a suggestion that has already drawn scepticism.

Earlier, White House economic director Larry Kudlow said that "both sides will suffer" from the widening US-China trade war, while predicting that the impact on US jobs and growth from higher tariffs assessed on Chinese goods would be "de minimis".

But Mr Trump doubled down on his stance yesterday, warning Beijing not to retaliate after Washington raised punitive duties on Chinese imports last week.

"China should not retaliate - will only get worse!" Mr Trump wrote. "I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don't make a deal because companies will be forced to leave China for other countries," he tweeted.

In his first interview since high-level talks between Chinese and American officials broke up last Friday without a deal, Mr Kudlow told Fox News Sunday that China had invited US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin back to Beijing.

No date has been set for the fresh talks, he said, but it was likely that Mr Trump would meet Chinese President Xi Jinping at the Group of 20 meeting in Osaka in late June.

WARNING

I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don't make a deal because companies will be forced to leave China for other countries.

US PRESIDENT DONALD TRUMP, in a tweet yesterday.

The trade fight between the world's two biggest economies is roiling markets and weighing on projections for global growth.

The Trump administration last Friday boosted tariffs on US$200 billion (S$273 billion) in Chinese goods to 25 per cent from 10 per cent, and gave Beijing a month to seal a deal or face tariffs on all its exports to the US.

Mr Trump said the next day that it would be wise for China to "act now" to finish a trade agreement, warning of "far worse" terms after what he predicted would be his re-election in 2020.

"We are right where we want to be with China. Remember, they broke the deal with us & tried to renegotiate. We will be taking in Tens of Billions of Dollars in Tariffs from China," he tweeted on Sunday. "Buyers of products can make it themselves in the USA (ideal), or buy from non-Tariffed countries."

Chinese Vice-Premier Liu He said after the talks ended in Washington that in order to reach an agreement, the US must remove all extra tariffs, set targets for Chinese purchases of goods in line with real demand, and ensure that the text of the deal is "balanced" to ensure the "dignity" of both nations.

Mr Liu's conditions underscore the work still to be done.

 
 
 

The People's Daily, the flagship newspaper of China's Communist Party, in a commentary yesterday blamed the US, which it said should take full responsibility for setbacks in the talks. And the nationalist Global Times newspaper said in an editorial that China "is willing to reach a deal" on trade but will never make concessions on issues of principle.

Meanwhile, Mr Kudlow conceded that US importers and consumers, not China, will pay the tariffs imposed by Washington on imported goods. But he said China feels the impact, too, in terms of a hit to its own economic growth.

"Both sides will suffer" the impact of the tariffs, he said. "The Chinese will suffer GDP losses and so forth with respect to a diminishing export market."

Mr Kudlow said that losing some US jobs and taking a hit to growth was a reasonable trade-off to correct "decades" of unfair practices by Beijing, especially since the US economy is strong.

While Mr Trump has repeatedly said that tariffs are being billed to or paid by China, economists say that is misleading. US importers are responsible for the duties, and ultimately US businesses and consumers pay through higher costs.

BLOOMBERG

 
A version of this article appeared in the print edition of The Straits Times on May 14, 2019, with the headline 'Trump claims US has upper hand in trade war with China'. Print Edition | Subscribe