President Trump, heaping pressure on China to make trade concessions ahead of his meeting with Chinese President Xi Jinping this week, is signaling that he will not back down from his plan to escalate tariffs in January.
Administration officials have been making arrangements for a meeting between Trump and Xi on the sidelines of the Group of 20 summit in Argentina this Friday and Saturday. And with both sides previously indicating a willingness to make a deal, that had raised hopes that Trump could announce a freeze on his previously stated plan to raise tariffs on imported Chinese goods Jan. 1. A freeze would be an important step that could lead to a cease-fire in an escalating trade war between the two largest economies.
But the Wall Street Journal reported Monday that Trump, in an interview with the newspaper, said that it is “highly unlikely” he would agree to Beijing’s request to hold off on raising tariffs.
Trump in September slapped 10% duties on $200 billion worth of Chinese products and indicated that the rate would jump to 25% in January, part of a series of actions intended to punish Beijing for alleged theft of intellectual property and other unfair economic behavior.
Trump has been known to make threats and back off, and analysts say anything can happen at the Group of 20 summit given the president’s unpredictability. But his comments just four days before the gathering of leaders of the world’s biggest economies could rattle financial markets and damp hopes of an easing of tensions between the two countries.
Stocks in recent weeks have been dragged down in part by concerns of increasing U.S.-China trade tensions and the damage that could inflict on a global economy already showing some signs of slowing growth.
Analysts believe that Chinese officials will be hard pressed to negotiate and give ground if the Trump administration moves ahead to jack up tariffs to 25%.
Trump previously imposed 25% tariffs on $50 billion of Chinese imports, and adding an additional $200 billion of Chinese goods to be hit with such hefty penalties would mark a big step-up in the U.S. trade fight with China.
For Chinese exporters and U.S. importers alike, the difference between 10% and 25% tariffs is huge. Very few companies can absorb what would amount to a 25% tax on goods, and American businesses have warned that such an increase in tariffs would sharply raise costs for consumers and could lead to significant disruptions in their operations.
The U.S. imported about $505 billion in merchandise from China last year, and Trump previously has said he would impose tariffs on that entire amount if China does not make a satisfactory deal. Trump repeated the threat in his interview with the Journal, saying that U.S. companies should make their products in the United States.