President Donald Trump is dramatically increasing pressure on China with a new round of tariffs. The two countries are currently locked in tense trade negotiations and Trump thinks that his recent tariff threat will sway things in Washington’s favor. The president has threatened to raise tariffs to 25% on Chinese goods worth billions of dollars. The announcement that came on Sunday casts doubt on growing reports that the US and China were actually close to an agreement on trade.
Trump wrote in a tweet that even though trade talks between the two countries were going on, the pace was not convincing at all. He accused Beijing of trying to “renegotiate” terms. Trump said that as of Friday this week, tariffs on all Chinese goods will go up to 25%. Right now, Beijing is already paying a hefty 25% tariff on goods worth about $50 billion and 10% on $200 billion. The tariff was slapped during the early days of the US-China trade war that threatened to escalate.
The plan by the Trump administration was to have a 25% levy on Chinese goods worth $250 billion. However, as trade talks between the two countries started, the president decided to refrain from the initial plan. Instead, a 10% levy was placed on Chinese goods worth $200 billion. This arrangement remained intact over the last 10 months.
However, Trump feels that nothing concrete has been achieved with the talks and as such, his new plan, according to the tweet sent on Sunday, will see a 25% levy slapped on Chinese products worth $250 billion. The Chinese are yet to respond to this recent threat. The trade talks between two of the biggest economies in the world are set to resume this week with Chinese Vice Premier Liu He expected to travel to Washington to meet his American counterparts.
Many sources with knowledge on this matter appeared to believe that the talks were actually going on well. In fact, Secretary of the Treasury Steve Mnuchin had hoped that the US team in the talks was getting ready to present a deal to the president. It’s not clear what has changed ever since but it seems that president Trump is not happy with how things have been going on so far.
China still has some leverage when it comes to tariffs. Beijing is one of the biggest importers of American agricultural products. Tariffs targeting this sector could have both economic and political ramifications for the president. This is because these agricultural states supported him in 2016 and are expected to do the same in 2020.
The Chinese have also said before that they are not afraid of a trade war. But many economists around the world think that such an escalation would be bad for the global economy. A deal may as well come through over the next few days. After all, Trump has set a Friday deadline for the tariffs to take effect. The White House is trying to convince China to buy more US goods as part of a long term strategy to even out the trade deficit between the two countries that has favored Beijing in the last few years.