White House slams China’s ‘weak’ tariff threat and ‘lousy’ economy
Economic adviser Larry Kudlow escalates the war of words between Beijing and Washington
Top White House economic adviser Larry Kudlow on Friday ridiculed China’s threat of US$60 billion of retaliatory tariffs as “weak” and said the world’s second-largest economy was in significant “trouble”.
After China threatened to impose new retaliatory tariffs on a variety of American goods – everything from beef to condoms – the war of words between Washington and Beijing escalated yet further.
Warning that China had “better take President Trump seriously,” Kudlow insisted the Asian giant “is in trouble right now – their economy is lousy, investors are walking out, the currency is falling”.
“Foreign investors don’t want to be in China. I noticed today that Japan’s stock market is now worth more than China’s – I love that,” he told reporters at the White House.
Beijing’s latest salvo came after the Trump administration upped the ante in its plans for additional tariffs on Chinese goods worth US$200 billion, suggesting the rate could be increased to 25 per cent, from 10 per cent.
“I might think the $60 billion is a weak response to our $200 (billion),” Kudlow said dismissively, while admitting that “there is a lot they can do to damage our companies in China.”
The two countries have been embroiled for months in a trade conflict that has threatened to hurt consumers in both countries.
The US imposed 25 per cent tariffs on US$34 billion of Chinese goods in early July, with another US$16 billion to be targeted in coming weeks, drawing an in-kind retaliation from China.
Days later, Washington unveiled a list of another US$200 billion in Chinese goods, from areas as varied as electrical machinery, leather goods and seafood, that would be hit with 10 per cent import duties.
But President Donald Trump raised the stakes this week with his threat to raise the tariff rate.
The Republican president has been keen to show that he is tough on trade ahead of tricky congressional elections in November, joking at a rally in Pennsylvania on Thursday: “China is not happy with me.”
“The politicians just watched as other countries stole our jobs, plundered our wealth and got the crown jewels of the American economy,” he told supporters.
“I am not another politician. I keep my promises.”
But there are increasing signs of White House concern about the economic impact of the dispute on Trump’s political base.
An all-out trade war could overshadow Trump’s otherwise solid economic record of low unemployment and stimulus-fueled growth.
China has said that its new duties will be applied only if Washington pulls the trigger on its new tariffs.
“China always believes that consultation on the basis of mutual respect, equality and mutual benefit is an effective way to resolve trade differences,” the Chinese commerce ministry said.
“Any unilateral threat or blackmail will only lead to intensification of conflicts and damage to the interests of all parties.”
“Cooperation is the only right choice for China and the United States,” Chinese Foreign Minister Wang Yi said after meeting US Secretary of State Mike Pompeo in Singapore on Friday, according to China’s official Xinhua news agency.
Washington and Beijing are locked in a battle over American accusations that China’s export economy benefits from unfair policies and subsidies, as well as from theft of American technologies.
Trump has threatened to apply tariffs to virtually all of China’s exports to the United States.
The latest round of US tariffs would range from five per cent to 25 per cent and would affect 5,027 products – a variety of agricultural goods such as beef, as well as small planes, chemical components, textiles, liquefied natural gas and condoms.
Beijing cannot match those measures dollar for dollar, because its exports far exceed imports.
But analysts say that China can absorb the blow by expanding stimulus programmes, fiscal spending and bank lending.
The yuan has also declined recently, threatening to take some of the bite out of tariffs by making imports cheaper, though the central bank took measures on Friday to stop it from falling any farther.
“The US and China have backup plans in areas like technology and agriculture, where they can look towards importing from third-party nations,” Ye Tan, an independent Chinese economic analyst, said.
“The Chinese are also coping by lowering the rate of the yuan, while the US can look towards countries in Southeast Asia as replacements for its imports, so it’s not a big issue.”