Supposedly, trade talks with China are going “really well”. The talks are going so well that Trump Says He Will Increase Tariffs on $200 Billion of Chinese Goods.
President Trump said Sunday that he planned to increase tariffs on $200 billion of Chinese goods to 25% from 10% on Friday, as negotiations for a U.S.-China trade deal are set to resume on Wednesday.
“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” he tweeted.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin concluded high-level trade talks in Beijing last week. Those talks are set to resume on Wednesday when Chinese Vice Premier Liu He leads more than 100 officials from more than a dozen government agencies to Washington—a sign Beijing thinks final details can be ironed out, according to people close to the talks.
The Chinese Embassy in Washington didn’t immediately respond to requests for comment. Mr. Trump’s announcement came in the middle of the night Beijing time.
Trade Talk Timeline
Trump has changed his tune on a trade deal with China so many times it’s hard to count.
- In December, Trump gave China 90 days to conclude a deal Otherwise. Trump said he would boost tariffs on $200 billion of Chinese goods to 25% from the current 10%.Those 90 days ended March 1.
- On December 31, I noted Trump Hails “Big Progress” on Trade Deal With China. I commented “Supposedly there is ‘big progress’ on a comprehensive trade deal with China. Color me skeptical.”
- On January 19, I noted China Pledges US Buying Spree to Reduce Trade Surplus With US to Zero By 2024. I commented “In discussions that are not yet public, and will likely be empty promises, sources say China Offers a Path to Eliminate U.S. Trade Imbalance.”
- On February 22, the Washington Post reported Trump says he expects to meet with China’s Xi and finalize new trade deal but Trump would not rule out extending the deadline beyond March 1.
- On February 24, Trump Tweeted there was “substantial progress on intellectual property” and suspended tariffs.
- On February 25, I noted Hooray! “Substantial” Progress With China (Just Don’t Ask Where) in response to Trump’s Tweets.
- At the end of February, Trump expected a small delay in signing.
- On March 2, I noted Trump Assails WTO “Straitjacket”, Attempts Pocket Veto of Entire Organization.
- On March 12, the Washington Post stated U.S. Trade Representative Robert E. Lighthizer told the Senate Finance Committee “Our hope is that we are in the final weeks” of negotiations. However, Schumer said on the Senate floor, “It is abundantly clear that China is playing us.”
- On March 13, Trump stated that he is in No Rush to Complete China Trade Deal. “I think things are going along very well – we’ll just see what the date is,” Trump told reporters at the White House.
- On March 14, Bloomberg reported China and U.S. to Push Back Trump-Xi Meeting to at Least April
- On April 4, I commented No Foolin’ This Time We’re Close, Really Close to Trade Deal With China
- On April 15, I posted Trump Asks China to Shift Soybean Tariffs to Something Else.
- On April 17, I noted Postponed Again: Trade Deal With China Now “Tentatively” Set for May 27 or June
- On April 29, I posted Senator Grassley Warns “Trump’s Tariffs End or His Trade Deal Dies”
Question of the Day
I understand it takes time to work out trade deals.
But how many times can one change the target date while citing “huge progress” and not look foolish?
Trump has over-promised and under-delivered on every trade discussion, not just with China.
Two Tweets, Two Lies
Lies of the Day
- Tariff payments are responsible for 0% of “great economic results”. Rather, Trump’s tariffs, or if you prefer, retaliatory tariffs devastated US farmers.
- Costs are not borne by China. Rather, costs are bore by US consumers and businesses that import from China, Mexico, etc.
Yes, the trade talks are going slow.
Implied Third Lie, Just Not Today
Trump’s comment that trade talks are going slowly is an admission that trade talks were not really going as well as previously claimed.
The changing timeline and today’s tariff increases are further proof.
What to Make of Today’s Tweets
It’s difficult to know precisely what to make of today’s Tweets. We will not know until we see how China reacts.
- If China pulls back or increases agricultural tariffs, it means China has had enough of Trump’s BS.
- If the trade talks continue without retaliation from China, it means this is a political ploy that China is willing to go along with.
Option Two Likely
I suspect we are dealing with option two.
If so, China has agreed in advance to go along with this BS. Trump will then announce that his increase in Tariffs are what closed the deal.
My base position has not changed one iota:
- There will be a deal. It will be hyped as the greatest trade deal in history.
- Mostly, the deal will return to the status quo of China buying more soybeans and other agricultural products.
- Any other benefit that allows Trump to brag was just something that China was willing to do all along, without all this hype and theatrics.
Mike “Mish” Shedlock
free trade cannot be one sided.If any industry complains that China is restricting their markets to our products we must immediately retaliate.
I have no sympathy to people who complain that we will have to pay more for our appliances and electronics at Walmart.We are selling our future for cheep appliances
How stupid can we be?.
Aren’t tariffs a form of consumption tax? Isn’t that the fairest tax? 😀
The pundits, and china, thought Trumo was lying about raising tariffs to 25% too, but he did. Great negotiators are unpredictable. That twitter post puts pressure on china during Thursdays meeting. Trump knows the threat of irrationality, and the ability to follow through, makes him formidable. Be grateful he is the one on the front-lines negotiating this deal, instead of politicians who don’t understand business, don’t understand foreign relations, and can barely grasp “basic” public policy.
Who said the yuan had to be next reserve currency in order for the dollar to stop being the reserve currency? Why can’t a hybrid, like the SDR, be the next step in the cycle? Something will be done in a couple of years as the dollar soars when the euro and yen implode.
China will be ready by 2032 to take over the reigns of economic power. Look at what they have been doing with the Belt and Road Initiatives. They partner with countries to bring about collaborative success, while the US has to overthrow leaders and start wars to prevent them from accomplishing their goals. China build roads, railways, and shipping routes from Brazil through Guyana and expands the Panama Canal to prepare for their growing economy. What does the US do? Tries to take over Venezuela to stop China’s progress. Why doesn’t the US simply compete? I’ll tell you why. It’s been much easier to simply squash and eliminate the competition, just as has been done in the healthcare industrial complex. China is building bridges and we are destroying them, along with the trust and confidence that’s needed to attract capital.
China is building roads and bridges for personal gain. 1) the countries they lend accept loans they cannot pay 2) the government builds the infastructure using chinese labor which does nothing for the local labor. 3) Anyone who owns a business in a tourist destination (like me) knows that Chinese tourists go to chinese owned restaurants, chinese owned hotels, and go on chinese owned activities. The goal is not a noble one. Its too bleed the country dry. Not to mention, the behavior and lack of class: i.e, shitting on the streets, squatting on toilet seats rather than sitting, and loud obnoxious behavior – like running over people at the airport – makes Chinese even less likeable then they already are. But we can predict what will happen. 1) china will not recover debt that is owed, 2) they wont be able to seize assets 3) they will become more aggressive with nations that dont pay. 4) war!
Your predictions sound like the US recipe.
Roads and bridges that carry goods can also carry troops and munitions. China has imperial ambitions. They retain ownership of a good part of the infrastructure that they build. The silk road is a gift horse initiative, and the US and rest of the world need to wake up to the fact. When their “benficiaries” can’t pay, the enforcers will show up. I wonder what the Russians think about what’s going on to their south? They ought to be scared S#!Tless, with China’s 1.3billion people and Russia’s empty real estate to the north.
Sounds like you think China learned well from our asset stripping methods that are well documented by John Perkins (i.e. Confessions of an Economic Hitman). Discount China’s economic rise at your own risk.
Bizarro? Schumer supports Trump on negotiating with China! I never thought I would see Chuck the Schmuck support Trump on anything:
Trump is certainly allowed to change his mind about things as circumstances require. The one thing I think he was really wrong about is “good trade deals are easy to negotiate”. Especially with the Chinese!
Left out is the cost to American workers, of the closure of 60,000 American factories.
Undercover Boss did a Program on Peavey. After the program was taped, the company shut down the factory and moved production to China. The production workers featured in the show lost their jobs.
I would take a close look at what firms traded the downside of the open this morning? Mnuchin most likely had all of his Wall Street cronies in the loop…including Goldman, on the announcement…the Smart money says that those who traded the downside open this morning were in the know…
Chinese pay the tariff. Americans do not. Smart Americans will purchase untariffed made in USA substitutes because they cost less. Smart Chinese will move their factories to USA and hire Americans. Win Win for USA. Lose Lose for China. President Trump is a genius negotiator. The jobs are coming home.
The one great thing about economics is that one can become an expert without bothering to do any study. In fact, it has been suggested that those who actually study economics know less than those who don’t. Too bad gender studies and art history majors have to go through all that work to become experts.
Comparative advantage of trade theory was developed assuming the gold standard would balance trade. Trade under fiat currency does not balance until a man like President Trump does the balancing.
China enjoyed fifty years of mercantile trade. The next fifty years could be American mercantile trade.
President Trump is unlikely to tariff mercantile Europe until after Brexit.
I was an A student in calculus based microeconomics. I enjoy economics. I studied monetary theory, banking, investment, and trade on my own.
Microeconomics? This is macro. If I were you I’d ask for a tuition refund.
I got a chemistry degree on the side. ☺☺
Mish got an engineering degree on the side.
It happens in the best of families.
Interesting. Didn’t know that about Mish. I am a ChemE with MBA who taught health policy and economics at the grad level.
Mish says it but generally tariffs I think are not understood. Trump is not imposing tariffs on the Chinese, he is imposing tariffs on US, US citizens pay them, not the Chinese. He is taking $$ from our paychecks and Social Security checks, the Chinese are not paying for anything.
Americans pay one way or the other. Its a question of who gets the loot in the end. Do we finish hollowing out America for the mercantilist paradise of “cheap stuff”, or do we take a moment to ponder the cataclysm that’s the physical economy today, incapable of supporting good wages and quality products?
Of course, that may be just a little too deep for the “cheap stuff” cheeleaders.
Not sure if Menaquinone is a new poster, but he comes across as a zealot, maybe one of those wild-eyed QAnon believers.
Let’s hope not, they tend to annoying because they’re absolutists, unable to see any nuance and shouting at everyone to TRUST THE PLAN!
Nah – this guy has to be pulling our let… trolling I think the kids call it.
“If so, China has agreed in advance to go along with this BS. Trump will then announce that his increase in Tariffs are what closed the deal.”
But that will make it look as though China caved in to Trump. Will China go along with that? China doesn’t have to worry about voters. And even if they did, most Chinese would probably blame US rather than their leaders. And they can probably withstand hardship better than Americans can.
Trade negotiation is a fig leaf for tariffs. President Trump is slow cooking the Chinese economy like the proverbial frog. There is no upper limit to tariffs. Next notch up is 40% tariffs on everything. Near 100% tariffs the Chinese frog will float to the top of the boiler.
China is already in an economic mess. But the military will be okay and the don’t have to face voters. Even if they did, the average Chinese person will blame it on US.
Trump has claimed the stock market and the economy. We’ll see how long he lasts.
One hundred million hungry unemployed migrant day laborers with cell phones make a flash mob that the Chinese Army cannot resist.
We shall see – China, US, Europe, Russia.
China is now threatening to balk at any more talks. North Korea is firing missiles and US ships are moving to counter Iran’s threatening moves in the middle east. It seems a new war is only a few days from being possible.
All European countries have a sales tax (VAT) which acts a as effective tariff, because they can compensate by cutting corporate taxes for domestic companies. China has no beef with this since taxation is a sovereign domain. Trump cut corporate taxes without a corresponding countervailing tax, blowing up the deficit. Now comes the tariffs which only the US consumers pay, and China will certainly retaliate. Most Earthlings look at the US politics as some kind of ritualistic dance that they have no chance to understand.
I love how Trump says China is paying the import tariffs. Wrong! US consumers are paying the tariffs. Just like they are paying for the wall he said Mexico would pay for. He is a lying scumbag trusted by by no one and hated by all.
Jobs and wealth are flowing out of China into the USA. President Donald Trump is an economic genius.
Q-tard or sarc?
CNN – yes, that CNN – has a poll out that shows 56% of Americans approve of the job President Trump has done with the economy. Here’s the most frightening part of that survey for those on the left:
All polls gave Venezuelan Chavez much higher numbers. Bad policies can give great results short term but horrible and catastrophic results long term. Yes two years is a short term for an economy our size. I suspect the economy and jobs will take a turn for the worst before the orange guy is out in 2 years.
The wish is father to the thought.
Only 44%, or perhaps 48%, to go, before his approval rating is as high as Kim’s!
The wish is father to the thought. Just saying
As the ruble revalues this week the Russian people can decide whether Putin’s excursion into Venezuela is worth their suffering. 20% of the Russian population survive on less than $200/month. 40% is doable.
President Donald Trump is proceeding to repatriate manufacturing to the USA. More power to him. Any business without such plans must perish. Japanese corporations have allocated $30 billion to relocate manufacturing into the USA. Boeing et.al. will soon learn that parts manufactured in China are too expensive. Stick a fork in Walmart. The short term tariff inflation will devalue wages to what a dindu is worth.
Big gov’t desperately needs the cash,DC burnin through cash like a hot knife through butter,raise tariffs or raise taxes…..your choice!
Why don’t you understand that there is an unlimited amount of cash available from the Fed? Print it and give it directly to the government, the banks, the people, anybody. Just do it.
Relax. That’s exactly what will happen — eventually. Then we’ll revel in being Venezuela i.e. stock investors can look forward to 1,000+% returns very year. What’s not to love?!
Q: How do you tell if a politician is lying?
A:His/her lips are moving.
His/her fingers are tweeting.
The truth is that the U.S. needs to greatly reduce its dependence on Chinese money to finance our deficits and everything else we use Chinese money for. Balance the damn budget.
Everyone wants to blame someone other than ourselves. It’s the Fed! It’s the Chinese! Now, I’m not here to say good things about either of those, but balance the budget, and the other problems go away. That is precisely the reason some favor going back to the gold standard. It forces the country to balance the budget because once they are out of gold, they have to stop spending, and they have to stop importing.
We have no intention of balancing the budget. It’s $1T-plus deficits from here on out.
Carl, you’re describing how the Fed IS the problem. They and their central banker lackeys have manipulated currencies into fantasyland and eliminated price discovery. These vast, continued imbalances wouldn’t be possible without their meddling.
We have no intention to balance the budget because, in a Democracy, you get elected by promising to do things for people, not by promising to make government smaller. Additionally, we have reached the point where more than half of all voters now work for either a government function (federal, state, county, city, local, school, etc), or for a government analogue (large business tied to government contracts). It can’t be undone, and must necessarily proceed until it collapses.
The Fed is the problem only in the sense that they function as a facilitator. They manage to keep the balls in the air, enabling the economy to continue to function, delaying the inevitable end. Is delaying it good, or bad? I guess that depends on your point of view, but either way, it will still happen, eventually.
It is impossible to balance the budget with the clowns in Congress in charge. Get that through your thick skull. The solution that will eventually be reached is MMT. The Fed prints the money and gives it directly to the government to spend as it wishes. No need to issue bonds for the world or the Fed to purchase. No need to pay interest on any new debt. I know, you don’t believe it could ever happen.
Hate to not agree but you are not very accurate. You need to do a little research.
If you bother to do a little research,,, or even read more of Mitch you would know that China is not financing our debt,,, good old Americans are buying up that new federal debt…
Well Mish isn’t always right, my friend. You are incorrect.
Why balance the budget when no one else does? Why not take on more debt when everyone else does? Beggar they neighbour is all they know how to do.
The deal is the deal will be constantly renegotiated.