President Trump threatened China with an almost hilariously dramatic trade war escalation on Sunday, days before a Chinese delegation of more than a hundred people arrive in Washington to iron out a final deal. Signaling his impatience with what he claimed was a slowdown caused Chinaโs efforts to renegotiate the plan, Trumpย tweeted that he will more than double the current U.S. tariffs on some $200 billion of Chinese goods (from 10 to 25 percent), as well as add a new 25 percent tariff on another $325 billion worth of Chinese goodsย โ and it will all happen on Friday, unless China does the deal. (The trade talks donโt even start until Wednesday.)
Regarding any efforts to renegotiate the deal, Trump insisted โNo!โ
He also falsely claimed that the higher tariffs his administration enacted โย which are paid by the U.S. companies importing Chinese goods and then usually passed along as higher costs to U.S. customers โ were paid by China directly to the U.S., incurred little cost toย Americans, and were โpartially responsible for our great economic results.โ
Trade talks had been proceeding well enough that the Trump administration held off another, planned-in-advance tariff bump in March. Negotiations have reportedly become more contentious in the end stage, however, though U.S. officials said that last weekโs talks in Beijing were productive.
Several issues remain sticking points heading into this weekโs meeting, according to the Wall Street Journal, including the Trump administrationโs contentious demand that the U.S. retains a unilateral ability to reimpose tariffs without retaliation if it doesnโt think China is holding to the deal. Another impasse is that China would like all of the Trump administrationโs tariffs rolled back immediately, while the U.S. wants to gradually reduce them as they confirm China is keeping its word.
Less than five days is also an awfully small amount of time for the Trump administration to get everything in place for Trumpโs impromptu tariff increase, notify U.S. industries, and make sure the process is protected against legal challenges.
Whatever hurdles remain, President Trump loves high-drama power plays and treasures his self-conjured reputation as a master dealmaker, so his last-minute threat to launch a trade-war nuke should have been expected. It still rattled economic markets and several U.S. industry groups on Sunday, however. There is also a risk that Trumpโs posturing could prompt a nationalist backlash in China.
Trumpโs threat could even work as intended, as any world leader who thinks Trump actually knows what heโs doing, listens to his advisers, or regularly understands the real world consequences of anything he does or says, has not been paying much attention. Tariffs and Trumpโs willingness to wield them despite the damage they do to American businesses are indeed a powerful negotiating tool. Plus, as economist and trade law expert Chad Bown told the Journal, while the tariff spike is probably an empty threat, โwith President Trump, you never know.โ
โIf they announce a deal later this week, it will make it appear as if he acted as tough as possible to get the deal,โ Bown also wisely predicted.
And if Trumpโs craziest-guy-in-the-room act is for real or seems real enough drive down the markets, the news coverage of bad economic numbers could make a quick and moderating impression on the president.
