So much for any hopes that Trump will push for a trade deal with China at any cost when he meets with the Chinese president later this week.
Minutes after the market closed, the WSJ reported that with just four days to go before his summit with China’s President Xi, Donald Trump said he expects to move ahead with boosting tariff levels on $200 billion of Chinese goods to 25%, calling it “highly unlikely” that he would accept Beijing’s request to hold off on the increase.
In an interview with the WSJ, Trump said that if negotiations don’t work out, he would also put tariffs on the rest of Chinese imports that are currently not subject to duties.
“If we don’t make a deal, then I’m going to put the $267 billion additional on,” at a tariff rate of either 10% or 25%, Trump told the WSJ.
While Chinese officials have said their priority at the meeting between Trump and Xi was to convince the U.S. to suspend the planned Jan. 1 increase in tariffs on $200 billion in imports from China to 25%, from 10% currently, Trump said that the U.S. was unlikely to accede.
And confirming that the US has no intention of easing its hard line stance, no matter what Larry Kudlow says, Trump made it clear that “the only deal would be China has to open up their country to competition from the United States. As far as other countries are concerned, that’s up to them.”
Adding insult to injury, Trump said that tariffs could also be placed on iPhones and laptops imported from China, a move which would certainly provoke an angry response from China and could result in a collapse in iPhone sales on the mainland. The administration has been worried about a consumer reaction should such items be subject to levies.
“Maybe. Maybe. Depends on what the rate is,” the president said, referring to mobile phones and laptops. “I mean, I can make it 10%, and people could stand that very easily.”
The WSJ notes that the mounting tariffs on Chinese imports have prompted many U.S. companies that export to the U.S. from China to examine whether they should put facilities elsewhere.
“What I’d advise is for them to build factories in the United States and to make the product here,” he said. “And they have a lot of other alternatives” Trump said, just hours after GM announced its intentions to shutter numerous US plants and fire thousands of workers, prompting an angry response from the president.
As a reminder, the key reason the Trump administration made a priority of renegotiating the NAFTA was to encourage U.S. companies to shift their production from China to North America, if not the U.S.
So are Trump’s latest belligerent comments just more jawboning or is the president being serious? Judging by the futures response, which have legged sharply lower following the interview…
… coupled with the sharp drop in the Chinese Yuan…
… and Apple stock…
… the market has is not waiting around to find out.
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