I’m ready to put tariffs on every import from China, US President Donald Trump warns
US leader says China has been ‘ripping off’ the United States for years and he’s willing to go ahead with extra tariffs on US$500 billion in Chinese goods
US President Donald Trump has said he is willing to slap tariffs on all Chinese products imported to the United States, a threat that could propel the world’s two biggest economies into an all-out trade war.
“I’m ready to go to 500 [billion dollars],” Trump told CNBC’s Joe Kernen on Friday, suggesting that every Chinese product would be subject to duties. “We have been ripped off by China for a long time.”
The “tremendous amount” threatened by Trump is roughly equivalent to the US$505.5 billion in Chinese products imported by the US last year. China, on the other hand, buys far less from the US, with last year’s total just US$130 billion.
Washington imposed tariffs on US$34 billion of Chinese products on July 6, prompting similar action from China. Then last week the US threatened to slap 10 per cent duties on another US$200 billion worth of the goods.
Trump’s threat caps a week of acrimony.
On Wednesday, the president’s top economic adviser, Larry Kudlow, blamed Chinese President Xi Jinping for blocking trade talks with the US. China’s foreign ministry fired back a day later, accusing American officials of “making false accusations”.
In the CNBC interview, Trump also took aim at China’s currency.
“Their currency is dropping like a rock, and our currency is going up, and I have to tell you it puts us at a disadvantage,” he said.
The yuan fell 0.5 per cent against the US dollar in offshore markets to 6.8130 per dollar after Trump’s comments. It had already fallen 6.7 per cent against the dollar since April, making it the biggest loser among Asia’s 12 currency pairs during the period.
“I don’t want them to be scared. I want them to do well,” Trump said. “I really like President Xi a lot, but it was very unfair.”
Within hours of the interview going to air, Trump continued his complaints on Twitter, saying China and the European Union deliberately kept their currencies and interest rates low.
Chinese analysts were not surprised by Trump’s threat.
China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day - taking away our big competitive edge. As usual, not a level playing field...
— Donald J. Trump (@realDonaldTrump) July 20, 2018
“He has threatened it time and again. And you can’t rely on his words,” said Shi Yinhong, director of Renmin University’s Centre on American Studies and an adviser to the State Council.
John Gong, an economics professor at the University of International Business and Economics in Beijing, called Trump’s threat a “knee-jerk reaction” that “shouldn’t been taken seriously”.
“It must have been in the heat of the moment. The probability of going so far is almost zero. And if it ever reaches there, it will no longer be a trade problem – the US$300-500 billion operations of American corporates in China will surely be implicated,” Gong said.
Shang-Jin Wei, senior scholar at the Jerome A Chazen Institute for Global Business at the Columbia Business School, said an escalation in the trade dispute would have a minimal impact on the US in the short term.
“The [US] economy was on the trajectory of a strong recovery even before Trump took over, and then the tax reform of the end of last year provided overstimulation to the economy,” Wei said.
But things were looking differently for China, he said.
“China’s economic growth had already been moderating because of a combination of rising wages and a shrinkage of working-age cohorts,” Wei said.
“The Chinese economy is more open in terms of its dependence on trade. Leaving aside technical factors, the same punitive measures on trade have greater potential for damage to the Chinese economy than damage to the US.
“If President Trump needed to pick a time to engage in a bad trade war, the current timing is lucky for him.”
Additional reporting by Robert Delaney