President Donald Trump’s decision this week to ratchet up the trade war with Beijing by slapping more tariffs on Chinese goods came after aides thought they had talked him out of it weeks ago, according to two people close to the discussions.
But the president’s annoyance with China finally boiled over this week after Treasury Secretary Stephen Mnuchin and U.S. Trade Representative Robert Lighthizer returned from trade talks in Shanghai and reported that Chinese officials offered no new proposals for ending an impasse that’s persisted since May, according to the people.
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Trump’s Twitter announcement on Thursday that he’ll impose a 10 percent tariff on roughly $300 billion in Chinese imports starting on Sept. 1 drew a quick reaction from China on Friday, further imperiling chances of progress in the talks. The U.S. is trying to get China to make commitments to rein in policies it says amount to widespread theft of U.S. technology and intellectual property.
“China will not accept any form of pressure, intimidation or deception,” Chinese Foreign Ministry spokesperson Hua Chunying said at a press conference Friday. China‘s Ministry of Commerce released a statement that said Beijing would impose countermeasures.
“The U.S. has to bear all the consequences,” the statement said. “China believes there will be no winners of this trade war and does not want to fight. But we are not afraid to fight and will fight if necessary.”
The renewed tensions come after initial optimism following a meeting between Trump and Chinese President Xi Jinping in Japan in late June.
Trump seemed convinced that China would resume huge purchases U.S. farm goods as a goodwill gesture for getting the stalled talks back on track, the people said. But the Chinese have not made significant purchases of soybeans or other commodities since the meeting.
One of the sources close to the discussions said the president is also deeply angry about what he sees as Xi’s failure to deliver on a promise to rein in exports of fentanyl to the U.S. The powerful opioid drug is blamed for fueling a U.S. addiction crisis.
Trump had been intent on making another tariff announcement in mid-July, but with the Shanghai meeting coming up, Lighthizer, Mnuchin and senior economic adviser Larry Kudlow initially talked the president out of the decision, the people said.
A USTR spokesperson denied that happened, saying it is “100 percent false” that Lighthizer had initially talked Trump out of tariffs.
On Friday, Kudlow defended Trump’s decision.
“In terms of the progress of the deal, the president is not satisfied,” he said to reporters at the White House. Kudlow said there are still plans to meet with the Chinese for another face-to-face meeting in Washington.
“There’s certainly a month here before the tariffs go into place. A lot of things can happen in a month. A lot of good things can happen in a month,” Kudlow told Bloomberg Television on Friday. He added that agriculture purchases by China “would certainly help the story.”
Meanwhile, Kudlow downplayed the consumer impact of additional tariffs on China as “minuscule.”
The targeted list of goods includes consumer goods like smartphones, clothing, shoes and other retail items. The decision earned backlash from the retail and business groups who warn that a continued tariff campaign will only damage what is now a strong U.S. economy.
The National Association of Manufacturers said the new tariffs would “certainly” get Beijing’s attention. “But it also has the attention of manufacturing workers in the U.S. and their families who are feeling the negative impact of the current tariffs and will be made even less competitive with this new tax on trade,” said the group’s president and CEO, Jay Timmons.
Kudlow later told Bloomberg Television that the White House has models to show a minimal impact the tariffs might have but declined to elaborate.
“The impact has fallen very heavily on China and our consumer sector remains strong,” he told.
Numerous studies have shown that tariffs on foreign goods are almost always paid by U.S. importers and the added cost is usually passed down the line to retailers and ultimately consumers.
The U.S. has already imposed a 25 percent tariff on about $250 billion worth of Chinese goods, representing mostly intermediate goods and inputs used in manufacturing.