President Donald Trump put his strong economic reviews at risk Sunday by threatening to escalate tariffs on $200 billion of Chinese goods “shortly” ahead of a critical week of negotiations between the two countries to end a yearlong tit-for-tat trade war.
Trump warned Sunday that he would lift tariffs Friday on a bundle of Chinese goods to 25% from the current 10% threshold, reactivating a threat he removed months ago just as it appears the two economic superpowers are on their way to a deal. He also warned he would tax nearly all of Chinese exports to the United States.
Trump appeared to be reviving an old playbook by threatening to ratchet up tariffs on Beijing in the hopes of applying additional pressure on China to force negotiators to strike a deal as early as this week. Earlier this year, Trump said he was prepared to enact new sanctions, and increase existing ones, if a deal wasn’t struck by a hard deadline of March 1, but indefinitely shelved those plans.
The President’s renewed tariff threat alarmed investors Sunday, sending stock futures down. The Dow was down more than 400 points Sunday evening, while the Nasdaq was down more than 100 points.
Chinese negotiators led by Vice Premier Liu He are scheduled to arrive in Washington on Wednesday with a very large delegation, the latest signal that two sides may be nearing the end stage of a comprehensive trade deal that will end a trade impasse that has rattled Wall Street.
The fresh comments by the President on Twitter came just days after he expressed cautious optimism over the possibility of brokering a possible trade deal with China soon. The White House has set its sights on wrapping up trade talks by the end of the month.
“The deal itself is going along pretty well,” Trump told reporters in the Oval Office on Friday. “I would even say very well, we’ll see what happens over the next couple of weeks. We’re getting close to a very historic, monumental deal and if it doesn’t happen, we’ll be fine too, maybe even better.”
Treasury Secretary Steven Mnuchin last week said the two countries had “productive meetings” in Beijing with his negotiating counterpart Robert Lighthizer, the US Trade Representative, and that those conversations with continue this week.
Chairman of the Council of Economic Advisers Kevin Hassett also boasted in an interview with CNN’s Poppy Harlow on Friday, “The proof will be in the pudding if the China deal is closed soon. What I’m seeing is it’s going to be a big positive for the economy.”
But Trump said in a tweet Sunday that talks between Washington and Beijing were moving “too slowly” and blamed the Chinese for attempting to renegotiate the deal.
“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods,” Trump said.
“These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billion Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%.”
It remains unclear how the Chinese will respond to the new threat and Beijing has tried to bypass additional penalties given the harm its brought to its economy.
Such pressure by the Trump administration on trade talks, however, has often sparked tumult on Wall Street with major selloffs over jitters the trade war would be long lasting. But investors more recently have been cautiously optimistic the two sides can strike a deal.
Trump’s comments could rattle markets on Monday after the stock market has been in full swing following surprising first quarter GDP growth and a strong April jobs report.
China has already become an issue in the 2020 campaign, with former Vice President Joe Biden sparking controversy last week when he suggested that China is not a threat to the US.
On Sunday, Senate Minority Leader Chuck Schumer tweeted: “Hang tough on China, President @realDonaldTrump. Don’t back down. Strength is the only way to win with China.”
Coming into talks this week, business leaders appeared to be mostly optimistic that talks were near completion with a number of critical issues left to be ironed out, including whether the two countries would agree to remove billions of dollars of tariffs that have been imposed over the past year.
“These negotiations have been picking up steam in the last few weeks,” said Myron Brilliant, executive vice president and head of international affairs for the US Chamber of Commerce, to reporters Thursday on a call. “We are certainly in the end game of these negotiations. We have a critical window before us.”
Both sides have put forth creative solutions to remove tariffs as part of a final deal, but ultimately, that call will need to be made between the two presidents, he said.
The Trump administration has been reluctant both privately and publicly to remove tariffs on China as a way to provide leverage that Beijing will keep its promises as part of any negotiation.
CNN’s Robert McLean contributed to this report.