Washington: President Donald Trump intensified pressure on China to strike a trade deal in Washington this week by threatening to more than double tariffs on $200 billion (Dh734 billion) of the Asian nation's sales to the world's largest economy.
In an abrupt shift from the White House after both sides had indicated negotiations were going well, Trump tweeted on Sunday he's not satisfied with the pace of progress and that the duties would increase Friday. He had twice delayed increasing tariffs to 25 per cent from 10 per cent after agreeing to a December 1 truce with President Xi Jinping to give their negotiators time to work out a comprehensive agreement.
"The Trade Deal with China continues, but too slowly, as they attempt to renegotiate," Trump said in his tweet. "No!"
Trump's tweet was an about-face from his recent comments that talks were progressing, with people familiar with the negotiations saying that the administration expected to announce a deal on Friday, following another round of talks this week in Washington.
Two days ago, White House economic adviser Kevin Hassett said the Trump administration is "heartened" to see progress in trade talks with China though some issues still need to be resolved. Trump later told reporters that "the deal itself is going along pretty well. I would even say very well," adding that a deal with Beijing could be weeks away.
Concluding a deal will hinge on the world's two largest economies resolving the stickiest issues in their trade dispute. Some of the main issues remaining include an enforcement mechanism to police the agreement and a decision over whether tariffs will be removed or stay in place, according to the people, who spoke on the condition of anonymity.
In recent days, US officials grew frustrated with some of China's backpedaling on some of their earlier commitments, including on the crucial matter of technology transfer, two people familiar with the situation said. That's emboldened trade hawks within the Trump administration to push for a harder line, including the raising of tariffs, the people said.
Chinese President Xi Jinping's top trade envoy, Liu He, returns to Washington on Wednesday for what was expected to be a closing round of trade talks. Trump's acting chief of staff Mick Mulvaney and Treasury Secretary Steven Mnuchin last week began publicly ramping up pressure on China to reach a deal, warning it could still walk away from the months-long negotiations.
Trump and the Chinese president will decide after the negotiations this week whether they'll meet to sign off on a pact, White House spokeswoman Sarah Huckabee Sanders said Thursday, adding that the U.S. sees such a meeting as likely.
Trump imposed duties of 25 per cent on an initial $50 billion of Chinese goods last year and then 10 per cent on an additional $200 billion in products in September. Those duties were set to rise to 25 percent on January 1 and then again on March 1, but Trump delayed that as talks continued. China has imposed tariffs on $110 billion of US exports in retaliation.
Based on calculations by Bloomberg Economics, tariffs at the current level add up to a 0.5 percentage-point drag on China's gross domestic product growth this year. An increase to 25 percent tariffs on $200 billion in Chinese exports from 10 percent would raise the drag to 0.9 percentage point. Tariffs on all of China's exports to the U.S. would increase the burden to 1.5 point.
Trump also said on Sunday that tariffs paid by China "are partially responsible for our great economic results," although it is companies that import Chinese goods, not China itself, that pay the bulk of the additional costs.
The conflict has contributed to a slump in global trade, dented business confidence and forced companies to upend their supply chains. The International Monetary Fund cut its global outlook last month to the slowest pace since the financial crisis, warning that an escalation in tariffs could push growth even lower.
Trump has repeatedly blamed what he sees as China's unfair trade practices for the hollowing out of the U.S. manufacturing sector. He has railed against America's trade deficit in goods China, which swelled last year to record $419 billion.
Trump launched the trade war in July, after an investigation by his trade officials concluded that China routinely abuses the intellectual-property rights of American companies. With the presidential election scheduled for November 2020, Trump may now come under pressure from his Democratic rivals to defend the economic damage from the conflict.
