Trump surprises China and the markets with threat of new tariffs


A Chinese staff peeps on a door during a China-US meeting between Chinese Vice Premier Liu He with US Treasury Secretary Steven Mnuchin and his Trade Representative Robert Lighthizer at the Diaoyutai State Guesthouse in Beijing, China, May.1, 2019. EPA-EFE/ANDY WONG/POOL

WASHINGTON, DC.– The threat by US President Donald Trump of new tariffs on Chinese imports if an agreement is not reached on Friday has intensified trade relations with Beijing and caused heavy falls in international markets.

With two tweets on Sunday, and after a truce of more than six months, Trump distanced the possibility of an end to the trade war between the two largest world economies, when it was thought that it was close to an agreement.

«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. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday,» Trump tweeted.

He announced that other goods imported from China which had remained untaxed until now would also face 25 percent tariffs.

«325 billions dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The tariffs paid to the USA have had little impact on product cost, mostly borne by China. The trade deal with China continues, but too slowly, as they attempt to renegotiate. No!» the president said.

The president’s messages were especially shocking given that last week Treasury Secretary Steven Mnuchin, who traveled to Beijing to continue the trade talks, said that they were in the final stages.

This week, a Chinese delegation led by Deputy Prime Minister Liu He was scheduled to arrive in Washington.

Beijing has said that it will maintain the travel plans of the negotiating mission to Washington, but it is not clear if Liu, head of the Chinese mission, will get on the plane, which adds uncertainty to the outcome of the talks.

«The Chinese government was taken by surprise by Trump’s tweet, Chinese officials worked during the holidays to prepare the visit,» Doug Barry, spokesman for the US-China Business Council, told Efe.

He added that «it is difficult to assess whether it is a US effort to gain more bargaining power in a potential final round or a reflection of real disputes that persist.

«Chinese officials have said that these tweets contrast with the progress made, so at least one of the parties seems to see this as an attempt to take advantage.»

Michael Hirson, director for China at consultancy EuroAsia, said in a letter to his clients: «Trump is ready, supported by a strong US economy, to wield that capital at a critical moment and almost certainly will comply with his threat this week.»

He added: «China should adopt a desperate movement to prevent it, something that does not seem feasible.»

Trump said in his criticisms of China that the US «loses» $500 billion a year in trade.

«I’m sorry we’re not going to keep doing it anymore,» he wrote on his Twitter account.

Despite the harsh political polarization in Washington, Trump was backed by one of the main leaders of the Democratic opposition, Senator Chuck Schumer.

«Stay strong with China, President Trump, do not give in. Strength is the only way to win with China,» said Schumer, who is one of the most outspoken critics of the president’s policies.

Wall Street opened on Monday with losses and the Industrial Dow Jones, its main indicator, fell shortly after its opening by 1.45%.

In Europe and Asia, the main stock indicators showed notable declines in the face of the renewed uncertainty.

Commercial tensions between Washington and Beijing were one of the reasons given by the International Monetary Fund (IMF) to lower the forecasts of global growth for 2019 to 3.3%, two tenths less than what was anticipated in January.

Trump warned at the end of last year that, if he did not reach an agreement with China before Mar. 1, he would raise the $200 billion of tariffs on Chinese imports from the current 10% to 25%.

However, he finally opted to extend this deadline to allow for ongoing negotiations.

Since December, Beijing has adopted goodwill measures, such as lowering tariffs on vehicles imported from the US, resuming the purchase of soybeans or submitting a bill to prohibit the forced transfer of technology.

But, as a condition for not increasing its tariffs to China, which affect everything from textiles and food to fuel, Washington also wanted Beijing to commit to structural changes in its economy to, among other things, protect the intellectual property of American companies. EFE-EPA

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