Shipping containers sit stacked at the Yangshan Deepwater Port, operated by Shanghai International Port Group Co. (SIPG), in this aerial photograph taken in Shanghai, China, on Friday, May 10, 2019. The U.S. hiked tariffs on more than $200 billion in goods from China on Friday in the most dramatic step yet of President Donald Trump’s push to extract trade concessions, deepening a conflict that has roiled financial markets and cast a shadow over the global economy. Photographer: Qilai Shen/Bloomberg (Qilai Shen/Bloomberg)
After trade talks with China decayed into an all-out tariff war that left Wall Street reeling and threatened across-the-board price increases for American consumers, President Trump sought Tuesday to reassure the public that a deal would come “when the time is right.”
The comments marked a reversal from the strident attacks he leveled at China on Monday. They came in a series of early morning Twitter posts after some Republican senators began questioning his tactics and prominent Democratic rivals saw an opening for attack.
“The American worker is getting killed by this,” former Vice President Joe Biden said Monday on WMUR, a New Hampshire radio station. “The American farmers are getting killed.”
Trump’s new assurances seemed to placate investors, as stock markets appeared to have stabilized after their worst one-day performance in months.
In a matter of days, a trade deal Trump had said was “95 percent” finished imploded, with the White House slapping steep tariffs on $200 billion in Chinese products, and the Chinese government retaliating with tariffs on $60 billion in American goods. On Monday, prospects of a cease fire appeared slim when Trump announced he was preparing to expand U.S. tariffs to cover all $540 billion in Chinese imports. This could interrupt the global economy and raise prices on everyday products from cellphones to sunglasses.
But in a Tuesday morning tweetstorm, Trump claimed that a deal was still within reach and that relations between the two nations could recover.
“My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn’t make any sense,” Trump tweeted Tuesday.
This marked a continuation of assurances Trump tried to give Monday night, when he told a group gathered at the White House that he would know in three or four weeks whether a deal could be reached.
“I have a feeling it’s going to be very successful,” Trump said.
[White House explores new farmer bailout plan as U.S.-China trade war heats up]
There were signs on Tuesday that his approach with China remained very fluid, consistent with the multiple strategies he has laid out for the public in the past week. He said, for example, that one of the best ways for the U.S. to counter China’s behavior would be for the Federal Reserve to cut interest rates.
“If the Federal Reserve ever did a ‘match,’ it would be game over, we win!” he wrote. Trump has been trying to pressure the Fed to cut interest rates for weeks, though he has never used this argument before in relation to China and trade.
In other tweets Tuesday, Trump seemed to be goading Beijing into making a deal before the situation worsened, repeating warnings that U.S. companies were likely to move operations outside China and take their business to countries not subject to tariffs. He also claimed that the revenue from the tariffs would be used to protect farmers from the impact of the trade war, and said that tariffs he imposed last year had “rebuilt” the steel industry.
Trump imposed tariffs on steel and aluminum imports from a range of countries, including Canada and Mexico. The U.S. doesn’t import much steel or aluminum from China, but Trump has alleged that his actions targeted Chinese production.
Though the metal tariffs helped U.S. steel companies increase revenue because their competitors’ costs rose, a number of U.S. companies said their expenses also escalated because they rely on foreign production. In October, Ford’s chief executive Jim Hackett said higher steel prices would cost Ford an estimated $1 billion, even though the automaker acquires most of its steel and aluminum from U.S. companies. It projected that global tariffs would cost the company $700 million in 2019, according to Reuters. The Council on Foreign Relations predicted that the high costs from the steel tariffs could trickle down to American workers, leading to more than 40,000 job losses.
Trump has vacillated between vowing to dig in against China and predicting a deal between the two countries could be weeks away. He also has argued that only China would feel the effects of a trade war, and not the U.S. But if Trump did levy a 25 percent tariff on all Chinese imports, U.S. economic output would shrink by at least $120 billion “as companies would have to rebuild entire supply chains,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in an investor note.
Corporate earnings, the key to stock prices, would drop around 10 percent, he added.
Still, Trump tweeted that the U.S. is “in a much better position now” than if a deal had been reached, but still stressed that “China wants a deal!”
With hopes fading for an early resolution of the yearlong U.S.-China trade dispute, the president said he would meet the Chinese president at the G-20 leaders summit in Osaka, Japan, on June 28-29. Treasury Secretary Steven Mnuchin told CNBC that the two sides remained in “ongoing” negotiations.
The prevailing tension and uncertainty sent U.S. stock markets tumbling on Monday. The Dow Jones industrial average, which was down 719 points at its low, ended the day down more than 617 points or 2.4 percent to close at 25,324.99. All 30 Dow stocks lost ground.
