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Abu Dhabi, UAETuesday 19 June 2018

Amid growing tension, Trump confident China will yield

US administration officials have stressed that the tariffs are not yet in place and the dispute could be resolved through talks

Donald Trump and his advisers feel there is still room for China to come to the table. The President is confident his personal relationship with Xi Jinping will be a crucial factor. Evan Vucci/AP
Donald Trump and his advisers feel there is still room for China to come to the table. The President is confident his personal relationship with Xi Jinping will be a crucial factor. Evan Vucci/AP

US President Donald Trump predicted on Sunday that China would take down its trade barriers, voicing optimism despite escalating trade tensions between the world’s two largest economies that have roiled global markets in the past week.

The two have threatened each other with tens of billions of dollars’ worth of tariffs in recent days, and Chinese officials said this is not the time for negotiations.

But Trump government officials said the tariffs are not yet in place and the dispute could be resolved through talks.

In a Twitter post on Sunday, Mr Trump echoed this, saying: “China will take down its trade barriers because it is the right thing to do. Taxes will become reciprocal and a deal will be made on intellectual property.”

He referred to his personal relationship with Chinese President Xi Jinping and said the two men would always be friends, adding, “Great future for both countries!”

There has been no indication that Mr Trump and Mr Xi have had any conversations since the trade conflict erupted last week and no formal trade talks between the United States and China have been scheduled yet.

On Tuesday, Washington unveiled about $50 billion worth of proposed tariffs on Chinese imports and on Thursday Mr Trump upped the ante, directing US trade officials to identify tariffs on another $100bn of Chinese imports. He said this was “in light of China’s unfair retaliation” against the earlier US trade action.

China responded by saying it was fully prepared to respond with a “fierce counter strike” if the United States followed through on the new threat.

China’s Commerce Ministry spokesman, Gao Feng, said on Friday that Mr Trump’s threat of another package of tariffs was “extremely mistaken” and unjustified, adding no negotiations were likely in the current circumstances.

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Crude oil and global equity markets tumbled on Friday on investor worries about the impact a tariff war could have on the world economy.

China’s state media has criticised the United States, saying its trade protectionism actions will end in defeat. “If the US says that it will pay any price, it must be firmly attacked,” China’s official Xinhua news agency said on Saturday.

On Sunday, the state People’s Daily newspaper sought to tap into concern among some US business leaders over the impact of Washington’s planned tariffs.

“We call on the international business community including the United States industrial and commercial circles to take prompt and effective measures and urge the US government to correct its errors,” it said.

Mr Trump’s chief economic adviser, National Economic Council Director Larry Kudlow, has sought in recent days to soothe concerns about a trade war, stressing that no tariffs have yet been implemented.

He reiterated that in an interview on CNN’s State of the Union show on Sunday, saying: “This process might turn out to be very benign ... Maybe China will want to come round and talk in earnest – so far it hasn’t, I hope it does.”

The United States, charging China with unfair trade practices and theft of intellectual property, proposed some $50bn in tariffs on Tuesday - 25 per cent tariffs on more than 1,300 Chinese industrial and other products from flat-panel televisions to electronic components.

China shot back within hours with its list of proposed duties on $50bn of American imports, including soybeans, aircraft, cars, beef and chemicals.

US Treasury Secretary Steven Mnuchin said on the CBS there was a risk of a trade war between the United States and China but that he did not expect one.

He added that Mr Trump and Mr Xi have a “very close relationship” and that the United States and China would continue to discuss trade issues.