‘Tariffs put United States in strong position’: Donald Trump digs in on trade war tactic as China warns of retaliation

US president says United States has strengthened its bargaining power as China reportedly considers scrapping trade talks

PUBLISHED : Monday, 17 September, 2018, 8:58pm
UPDATED : Monday, 17 September, 2018, 8:58pm

American tariffs have cemented the United States’ bargaining power in its trade war with China, US President Donald Trump said on Monday after Beijing again warned of retaliation for any further levies and reportedly considered cancelling trade talks.

Trump said tariffs had put the US in a very strong bargaining position and “billions of dollars, and jobs” had flowed into the US.

“If countries will not make fair deals with us, they will be ‘Tariffed!’” he said on Twitter.

The statement came as expectations mounted that the White House would announce new tariffs on US$200 billion in Chinese goods as early as Monday.

If the US did go ahead with the tariffs, they would be the biggest round since the first batch on Chinese exports in July.

With the tariffs looming, Chinese foreign ministry spokesman Geng Shuang warned that China would hit back if any more went into effect.

“If the US launches any new round of tariffs against China, China will inevitably take necessary retaliation, to protect our legitimate rights,” Geng said.

The US and China have already imposed tariffs on US$50 billion of each other’s goods and the prospect of more could scuttle talks meant to help end the trade war.

Last week, the US Treasury Department invited senior Chinese officials, including Vice-Premier Liu He, to the United States for talks with US Treasury Secretary Steven Mnuchin, an invitation Beijing welcomed.

China ‘won’t just play defence as trade war with US escalates’

But The Wall Street Journal reported on Sunday that the Chinese government was considering declining the offer if the US went ahead with the new tariffs.

One senior Chinese advisory official said China would not negotiate “with a gun pointed to its head”, according to the report.

Geng said on Monday that all trade talks between the two nations should take place on an equal footing.

Despite Mnuchin’s approach, Trump was reported to have instructed aides to proceed with plans for new tariffs on US$200 billion in Chinese products, according to people familiar with the discussions.

Zhang Zhexin, a specialist in China-US relations from the Shanghai Institutes for International Studies, said China might not send a senior delegation to the US because the tariffs would invalidate the reason for going in the first place.

“If tariffs are to be announced before the trade talks, there will be no point for the talks to go on because the purpose of the talks is to prevent such sanctions from happening,” Zhang said.

He said Washington’s double-handed approach – of proposing trade talks while threatening to launch more tariffs – was not working for China.

US makes move on trade war talks as pressure mounts ahead of midterm elections

Tao Wenzhao, a researcher for the Institute of American Studies at the Chinese Academy of Social Sciences, agreed that China was unlikely to go ahead with the talks if new tariffs came in.

“If the US genuinely wants to solve problems, they would halt any further actions until after the talks. China will not entertain this kind of two-way approach that the US seems to have adopted. On the one hand you say you want to talk, on the other you put more tariffs on us. How can [China] know how to solve this problem with you?” Tao said.

On Sunday, former Chinese finance minister Lou Jiwei, now chairman of the National Council for Social Security Fund, told a forum in Beijing that China had a number of retaliatory tools at its disposal, including restrictions on exports of goods, raw materials and components core to US manufacturing supply chains. He said such restrictions could even apply to Apple’s iPhones, which are assembled in China.