Sources say Trump Wants $200 Billion in China Tariffs Despite Talks.
Trump met with his top trade advisers on Thursday to discuss the China tariffs, including Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer, the people said. Mnuchin has led a recent overture to the Chinese to re-start trade talks.
The public comment period for a list of tariffs on about $200 billion in Chinese goods closed last week, and Trump said the duties would be imposed “soon.” The new round would be in addition to $50 billion in Chinese goods that already face a 25 percent duty. U.S. stocks erased gains on the news.
The Chinese have retaliated with tariffs on an equivalent amount of U.S. exports, and have promised to match future rounds of U.S. duties.
Before his meeting on Thursday, Trump boasted on Twitter that he has the upper hand in the trade feud with Beijing and feels “no pressure” to resolve the dispute.
Damn the Insanity, Full Speed Ahead
Cold Feet?
I commented yesterday Trump Gets Cold Feet on More Tariffs: US Proposes More Talks With China.
My rationale was that Trump was concerned about the midterm elections and he was looking for face-saving way to back off.
Here’s more from the Wall Street Journal report U.S. Proposing New Round of Trade Talks With China.
>The new outreach to Beijing comes less than a week after Mr. Trump threatened not only to go forward with the planned tariffs but to add another $267 billion, effectively putting duties on all of China’s shipments into the U.S.
>On Wednesday, organizations representing thousands of companies in industries including retailing, toy manufacturing, farming and technology said they are cooperating on a lobbying campaign called Tariffs Hurt the Heartland to oppose Mr. Trump’s duties.
>Retailers in particular have ramped up warnings that further tariffs, especially those aimed at consumer goods, are threatening to disrupt supplies for the year-end holiday shopping season.
>“The tariffs are coming so fast and furiously, they’re giving retailers large and small whiplash,” said Christin Fernandez, vice president for communications for the Retail Industry Leaders Association.
Questioned Answered – Possibly
A week ago I wrote Trump Eyes Another $267 Billion in Tariffs (And He’s Foolish Enough to Do It)
It now appears that was the correct position, but Trump has been known to change his mind.
As a negotiating tactic, pressuring countries has a 100% failure rate. Think Russia, Iran, Venezuela, and Turkey, all ongoing at the moment.
So forget about this being part of the “art of the deal”, except perhaps in Trump’s head.
Note that Mexico Learns How to Play Trump’s “Let’s Make a Deal” Game.
Big Fluffy If
Efforts to end the dispute with China have fizzled four times so far. The most recent attempt was last month.
If Trump reverses again and there is a deal, expect it to be of the same fluffy deal as with the EU, where there are no hard numbers. Supposedly the EU will buy more soybeans.
In the NAFTA talks, Mexico placed new demands unless it gets a buy-in from Canada.
Curiously, the existing NAFTA deal is arguably better than the one Trump just negotiated.
Beige Book
In regional Fed reports assembled yesterday, the word “tariff” came up 37 times, most of them showing concern. I posted 26 comments. Here are a few.
- A sizable number of contacts in manufacturing and distribution sectors noted that recent hikes in tariffs have raised their overall input costs, and some have expressed concern about the effects of changes in trade policy on various aspects of their business.
- Philadelphia Fed: Nearly two-thirds of the firms that offered general comments noted that price hikes and/or supply disruptions had already occurred or were anticipated because of tariffs and the threat of tariffs.
- Philadelphia Fed: For those firms already impacted, contacts often cited double-digit price increases; some typical responses were that tariffs “have put us out of business” on certain products and “are a cloud on every facet of our business planning.”
Shades of Smoot-Hawley
So far China tariffs are at $50 billion. Trump said today he will up that to $250 billion.
The total tariff threat (with China alone) is $512 billion (all imports from China).
The supply chain disruptions have me thinking about shades of Smoot-Hawley.
Here’s Trump’s attitude: What, Me Worry?
Related Articles
For further discussion, please see:
- Fed’s Beige Book Shows Tariff Concerns, Agricultural Weakness, Price Pressures.
- Lagarde Warns of Emerging Market and Low-Income Shocks by Trade War With China
Mike “Mish” Shedlock
A strong dollar causes many unproductive responses, and the response you will never see is any govt looking in the mirror and reforming. How do you propose we stop the illegal trade of China, and no, allowing China to steal technology is not beneficial to US citizens. Tough love works!
Since China has 3x the tariffs as we do it’s time to even it up.
Aids? Perhaps “Aides”.
yes, thanks
Every political interference in a market creates politically-dependent winners and losers. The unbalanced trade terms created by the Political Class over the last few decades have created winners (companies which outsource & import and their investors) and losers (workers with lost jobs, reduced opportunities, and lowered incomes). It is hardly surprising that the winners under the status quo ante want it to remain.
The canary in the coal mine is the inability of the (unilateral) free traders to make any headway with the issue of tariffs among the citizenry as a whole. We have an election coming up, and tariffs are almost a non-issue. There are apparently a whole lot more people who feel like losers from past trade policies than people who feel like winners. Not surprising, given the magnitude of the unsustainable trade deficit.
If the free traders were using their heads, they would use this evident fact to beat on the exporting countries and get them to move towards free trade by lowering their tariffs and non-tariff barriers.
“given the magnitude of the unsustainable trade deficit.”
Since you said that can you please o please explain what happens when unsustainable arrives. In other words can you exactly explain what happens if we eliminate our tariffs unilaterally? Don’t mince words I’m willing to read your perceived end game of that unsustainable trade deficit? Will the US run out of dollars? Really, I would like to hear it…
The Chinese, like our own quasi-Marxist progressives, are firmly anchored in their post-WW11 worldview. They can’t believe Trump and are betting that he’ll ‘come to his senses’ after the election. It’s likely someone will, but it’s a real hard sell convincing those in flyover country that having their real wages fall 5% in 45 years is a good thing…just for cheaper gadgets from China.
Flyover country wage decline has exactly nothing to do with China.
And exactly everything to do with wages earned from productive flyover country labor, having been stolen, and handed out to people not in flyover country, in he form of asset price appreciation and its effects.
If flyover country people want their money back: End the Fed. Now. Go back to using Gold. End activity taxes, both income and sales; while taxing property for whatever government needs for sustenance. Reassert property rights in the form of if you own a plot of land, it’s exactly nobody’s business but yours what you do with it. Whether you farm it, or build a 200 story tower there. Then dramatically scale back nonsensical IP laws, which serve no other purpose than enriching entrenched has-beens and their ambulance chasing hangers-on, while preventing more efficient new startups from forming, and bidding up wages of workers
Then sit back and watch real salaries for productive work increase at a rate not seen since for over a century. The only reason Americans cannot even compete with a bunch of commies anymore, is because Americans are now less free to optimize than even the commies. They’re unfree. We are unfreer. And Trump is doing nothing but continuing to make us more so.
Fed policy and continual increase in debts are what has enabled offshoring of production to China and importation of millions of low wage immigrants to USA to lower wages thereby screwing flyover country and ordinary workers.
Without Fed and continual increases in debts offshoring of production and importing millions of low wage immigrants would NOT have been possible because demand for products and company profits would have crashed absent Fed policy and increase in debts when production would have been offshored and millions of low wage immigrants would be imported.
The number of US businesses harmed by these tariffs is large–202 according to this article:
reason.com/archives/2018/09/14/tariff-victims
Reason is a Koch Brothers controlled propaganda rag on trade and immigration that always cheerleads offshoring of production and importing millions of low wage immigrants both illegal and legal…
Trump is stupid to put the tariffs before mid-terms…
Tariffs are the correct route in my way but it will NOT be painless so only a fool does tariffs for 200 billion in products and gets the Chinese revenge just before mid-term elections…