SPRINGFIELD, MISSOURI/BEIJING (BLOOMBERG, REUTERS) - US President Donald Trump has threatened to impose even more tariffs on Chinese goods if Beijing dares to impose tit-for-tat measures in response to Washington's latest package of levies on US$200 billion of Chinese exports.
Saying that the US has "more bullets", Trump cautioned the world's second-largest economy to think twice before engaging in a trade war with the largest.
"We're going to go US$200 billion at 25 per cent on Chinese-made goods. And we will come back with more if they retaliate. We have a lot more to come back with," Trump told a packed rally in Missouri for Republican Senate candidate Josh Hawley on Friday (Sept 21).
"We are cracking down on the unfair trade practices of China… We have rebuilt China. We have given them such wealth. And we are changing it," Trump told the cheering crowd.
"So we charged 25 per cent on US$50 billion worth of merchandise tariffs coming in. And then they said, 'We're going to do the same thing'. And I've said: 'That is okay. We have far more bullets'."
Washington had announced on Monday (Sept 17) that the US will begin to levy new tariffs of 10 per cent on US$200 billion of Chinese products starting on Sept 24, with the tariffs to go up to 25 per cent beginning 2019.
Trump has threatened duties on a further US$267 billion of made-in-China goods, which would hit almost all other consumer products including mobile phones, shoes and clothes.
On Tuesday, China hit back, saying it would levy tariffs on US$60 billion worth of US goods effective from Sept 24.
China also cancelled trade talks with the US and abandoned plans to send Vice-Premier Liu He to Washington next week, the Wall Street Journal reported on Friday, citing people familiar with the matter.
US Treasury Secretary Steven Mnuchin sent an invitation to Liu, President Xi Jinping’s economic czar, two weeks ago asking for a fresh round of talks this month. Previous negotiations had ended without any breakthroughs.
China's Vice-Commerce Minister Wang Shouwen, who led China’s negotiating team in the last round, was to again lead a group for the talks in the US and then Liu himself would follow up with a trip to Washington on Sept 27 and Sept 28. Both of those trips have now been called off, the Journal said.
China's Ministry of Commerce and the Ministry of Finance didn’t respond to faxes inquiring about the matter on Saturday (Sept 22).
A senior White House official had said on Friday the United States is optimistic about finding a way forward in its trade dispute with China, but it does not have a date scheduled for further talks as it assesses Beijing’s response to the latest round of tariffs.
Speaking to reporters at the White House on condition of anonymity, the official said despite its protestations, China was well aware of US demands it halt what Washington considers unfair trade practices.
Trump officials perceived the offers from Beijing—largely involving more Chinese purchases of US agricultural and other products—as inadequate in addressing the White House’s demand for a fairer playing field for American businesses in China.
“We have been very clear in all of these meetings about what is ... required,” the official said. “I am still optimistic that there is a positive way forward, and the president wants us to continue to engage to try to achieve a positive way forward.”
The official made clear the administration’s ultimate goal was not to separate the interlinked US and Chinese economies, but he said companies could choose to alter their supply chains if Beijing did not change course.
“Our goal here is not to cleave off the Chinese market from the US market, I don’t think that’s good for long-term growth,” he said. “In the short term there is of course a risk that if China continues on the path it is, that some companies as a result of this may start ... to move supply chains.”
The latest round of duties comes on top of a 25 per cent tariff already imposed on about US$50 billion in Chinese goods, which spurred counter-tariffs from Beijing.
Trump continued to hit out at China late this week, signalling the trade war won’t end any time soon. “It’s time to take a stand on
China,” he said in an interview Thursday with Fox News.
”We have no choice. It’s been a long time. They’re hurting us.”
“The new US tariffs on Chinese goods, mostly consumer-oriented, will depress spending and hurt the retail sector beginning in 2019,” Seema Shah and Danielle McIntee, analysts with Bloomberg Intelligence, wrote in a note on Friday.
”Lower-income families, already pinching pennies, are most exposed, given the likelihood of tariff-related price increases on everyday items.”
Commerce Secretary Wilbur Ross earlier this week said the tariffs are spread over such a wide range of goods that Americans shouldn’t notice price increases.
“We were trying to do things that were least intrusive on the consumer,” Ross said on CNBC on Tuesday. “We really went item-by-item trying to figure out what would accomplish the punitive purpose on China and yet with the least disruption in the US.”