President Trump wants to move ahead with a plan to impose tariffs on $200 billion worth of Chinese imports as soon as a public-comment period concludes next week, according to six people familiar with the matter.
Companies and members of the public have until Sept. 6 to submit comments on the proposed duties, which cover everything from selfie sticks to semiconductors. Trump plans to impose the tariffs once that deadline passes, according to the people familiar with the matter, who spoke on condition of anonymity because the discussions aren’t public.
Stocks fell on the news. The offshore yuan dropped to the day’s low, while the dollar and the yen gained amid a flight to safety. The tariff news exacerbated already fragile market sentiment amid currency routs in Argentina and Turkey.
Some of the people cautioned that Trump hasn’t made his final decision, and it’s possible the administration may enact the duties in installments. The United States has so far imposed levies on $50 billion worth of Chinese goods, with Beijing retaliating in kind.
It’s also possible Trump could announce the tariffs next week but say they will take effect at a later date. The Trump administration waited about three weeks after announcing in mid-June that it was imposing tariffs on $34 billion worth of Chinese goods before they were implemented. The next stage of tariffs, on $16 billion worth of goods, took hold this month.
The imposition of the $200-billion tranche would be the biggest so far and would mark a major escalation in the trade war between the world’s two largest economies. It is likely to further unnerve financial markets that have been concerned about the growing tensions.
China has threatened to retaliate by slapping duties on $60 billion worth of U.S. goods. The Trump administration is finalizing the list of Chinese targets and tariff rate, which could range from 10% to 25%, following six days of public hearings earlier this month.
Trump’s plan to bring down his biggest hit yet on China comes as two-way trade talks show little sign of progress. Discussions between U.S. and Chinese officials last week in Washington yielded few results, thwarting hopes for a quick deal.
The move comes as China hawks have been on the ascendancy in the Trump administration. One of them — U.S. Trade Representative Robert Lighthizer — has been responsible for one of the president’s biggest trade victories so far by forging a bilateral trade deal with Mexico to replace the North American Free Trade Agreement. The deal was announced Monday, and Canada is negotiating to join.
The latest China tariff decision is causing heated debate within the administration, with Lighthizer and White House trade advisor Peter Navarro pushing for quick action, and Treasury Secretary Steven T. Mnuchin and White House economic advisor Larry Kudlow arguing for more time, according to people familiar with the matter.
Trump cut off negotiations with China because of what he perceives as Beijing’s lack of cooperation in nuclear talks with North Korea, one of the people said. The president wants to squeeze China, believing the United States has leverage over Beijing, that person said.
On Wednesday, Trump accused China of pressuring North Korea not to bend in nuclear negotiations with the United States. But he insisted that the trade differences would be resolved.
“As for the U.S.-China trade disputes, and other differences, they will be resolved in time by President Trump and China’s great President Xi Jinping. Their relationship and bond remain very strong,” Trump said on Twitter.
Edward Alden, a senior fellow at the Council on Foreign Relations in Washington, said Lighthizer’s NAFTA successes were strengthening his hand with the president. That raised the possibility that after months of being passed around various figures in the administration, the talks with China could finally end in the hands of one of its most able negotiators and influential China hawks.
If the president “hands the China file to Lighthizer, there’s a chance of real progress,” Alden said. NAFTA “is clearly a personal triumph for Lighthizer. He did this deal.”
If Lighthizer is put in charge of China talks, that “at least opens the door to a serious negotiation with China, which we have not seen yet,” Alden added.