US President Donald Trump raised pressure on China with a threat to hike tariffs on $200 billion worth of Chinese goods in a tweet that sent global financial markets reeling on Monday.
Trump’s comments on Twitter came as a Chinese delegation was scheduled to resume talks in Washington on Wednesday aimed at resolving a trade war that has shaken investors and cast gloom over the world economy.
Trump turned up the heat Sunday by saying he would raise import taxes on $200 billion in Chinese products to 25 percent from 10 percent as of Friday.
A Chinese trade team is still preparing to head to Washington for negotiations later this week, Beijing said Monday.
“We are currently working on understanding the situation,” said foreign ministry spokesman Geng Shuang during a regular news briefing.
“The Chinese team is currently preparing to go to the US for negotiations,” Geng added, without specifying whether Beijing’s top trade negotiator Liu He would make the trip.
Beijing has responded to previous US threats by saying it wouldn’t negotiate under pressure.
Stock markets fell on the news. The future for the Dow Jones Industrial Average lost 1.8 percent and that for the S&P 500 sank 1.6 percent. The Shanghai Composite index plunged nearly 6 percent while the Hang Seng in Hong Kong sank 3.1 percent. Japan’s markets were closed for a holiday.
Trump had twice pushed back deadlines - in January and March - to raise the tariffs in a bid to buy more time for a negotiated settlement. But on Sunday, Trump, who has called himself a “tariff man,” said he’s losing patience. “The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” Trump tweeted.
In his tweets, Trump also threatened to slap tariffs on another $325 billion in Chinese imports, covering everything China ships annually to the US.
The two countries are locked in a high-stakes dispute over China’s push to establish itself as a technological superpower.
The US charges that China is resorting to predatory tactics - including cybertheft and forcing foreign companies to hand over technology - in a drive to establish Chinese companies as world leaders in advanced industries such as robotics and electric vehicles.
Trump’s threat makes going ahead with talks “very difficult politically” for President Xi Jinping’s government, said Jake Parker, vice president of the US-China Business Council. He said the Chinese public might “view this as a capitulation” if Beijing reached an agreement before Trump’s Friday deadline.
And if Trump goes ahead, American companies in China “would be very concerned” about official retaliation, said Parker.
A substantive deal would require China to rethink the way it pursues its economic ambitions, abandoning or scaling back subsidies to its companies, easing up on the pressure for foreign companies to share trade secrets and giving them more access to the Chinese market.
Philip Levy, senior fellow at the Chicago Council on Global Affairs and a White House economist under President George W. Bush, said the talks are too complicated for Trump’s high-pressure tactics to work. “The president treats this like we’re haggling over the price of a used car,” Levy said.
The fight between the world’s two biggest economies is raising worries about global economic growth. The IMF, the World Bank, and others say the US-China standoff is reducing world trade and creating uncertainty for companies trying to decide where to buy supplies, build factories, and make investments.
“Certainly the risk of an all-out US-China trade war has increased significantly,” said Tao Wang and Ning Zhang of UBS said in a commentary.