Trump tweet on tariff tactic could sink China talks

Workers at a Harley-Davidson dealership in Shanghai. From American motorcycles and bourbon to Chinese machines and parts, the world's two largest economies have exchanged punitive tariffs that slice through a wide swathe of products.
Workers at a Harley-Davidson dealership in Shanghai. From American motorcycles and bourbon to Chinese machines and parts, the world's two largest economies have exchanged punitive tariffs that slice through a wide swathe of products.PHOTO: AGENCE FRANCE-PRESSE

He says countries will be 'tariffed' if they don't make a fair deal; China warns of retaliation

WASHINGTON • President Donald Trump tweeted yesterday that tariffs have bolstered Washington's bargaining position in a trade dispute with Beijing while cost increases to American consumers have been negligible, warning of more levies as prospective trade talks with China appeared in doubt.

"Tariffs have put the US in a very strong bargaining position, with billions of dollars, and jobs, flowing into our country - and yet cost increases have thus far been almost unnoticeable," Mr Trump said on Twitter.

"If countries will not make fair deals with us, they will be 'tariffed!' " he wrote, using a new phrase to describe his approach.

Mr Trump's tweet came as a senior administration official said the US is ready to go with US$200 billion (S$275 billion) in additional tariffs on Chinese goods, with a possible announcement coming soon.

China's Foreign Ministry reiterated that the escalation of the trade conflict was not in anyone's interest. Beijing will be forced to retaliate if the US rolls out new tariffs against the country, ministry spokesman Geng Shuang was cited by Huanqiu.com as saying.

Mr Trump also touted the benefits his 25 per cent tariffs on steel imports have had so far on US industry, as some companies have deployed promotional campaigns in support of those measures targeting voters in iron-and steel-producing states. Opponents have said the import barriers may raise costs, lower earnings or force employers to dismiss workers or move operations offshore.

"Our steel industry is the talk of the world. It has been given new life, and is thriving. Billions of dollars is being spent on new plants all around the country!" Mr Trump said in another tweet yesterday.

Conflicting messages coming from the Trump administration on tariffs amid the US trade war with China could sink prospective negotiations between the two countries before they begin, damaging pros-pects for a resolution to the growing dispute, according to a Wall Street Journal (WSJ) report, which cited officials with knowledge of the discussions.

The WSJ report quoted one senior Chinese official as saying that China would not negotiate "with a gun pointed to its head".

Beijing last week welcomed the invitation to meet US Treasury Secretary Steven Mnuchin, an offer which was then undermined by a tweet from the US President.

The lack of unity within the US administration on trade is not new - Chinese and American officials have held a series of talks over the dispute, and reached at least one agreement which was subsequently abandoned by the US President.

The lack of progress and collapse of that deal have made future negotiations more difficult, as it is unclear who speaks for the US administration, and there is a lack of confidence that any deal will be honoured.

Besides retaliating with tariffs, China could also restrict export of goods, raw materials and components core to US manufacturing supply chains, former finance minister Lou Jiwei told a Beijing forum on Sunday, according to an attendee.

Mr Lou is chairman of the National Council for Social Security Fund. The person who attended the event and is familiar with the White House's thinking said such a move would likely attract sharp retaliation from Washington, which has studied its own limits on exporting key technologies to China.

As the trade war unfolds on the international stage, analysts say Mr Trump's brash approach to try to win concessions from Beijing has provoked a public fury that could ultimately thwart his efforts.

Chinese President Xi Jinping's iron grip on power depends on healthy support from the coun-try's exploding middle class, and now that middle class, angered by Mr Trump's escalating threats, expects their leader to respond with strength.

This could make finding a compromise to end the escalation even more difficult.

BLOOMBERG, REUTERS, WASHINGTON POST

A version of this article appeared in the print edition of The Straits Times on September 18, 2018, with the headline 'Trump tweet on tariff tactic could sink China talks'. Print Edition | Subscribe