United States President Donald Trump said on Monday that he stands ready to hit China with more tariffs on at least $300bn worth of goods if he and China’s President Xi Jinping are unable to come to a trade deal later this month at the Group of 20 summit in Japan.
Last month, two days of talks between the two countries ended without a deal.
Trump continues to say he is expecting to meet with China’s leader during the summit, scheduled for June 28-29 in Osaka, Japan. But China has yet to confirm any meeting with Trump, and the two nations’ trade negotiating teams have not met since May 10.
In an interview with US television network CNBC on Monday, Trump said he still thought China’s leader would attend the G20 summit. When asked if a new round of US tariffs would go into effect if Xi was not at the meeting, Trump said “Yes. It would”.
If we don't make a deal, you'll see a tariff increase.
On Monday, China’s foreign ministry said the country is open to more trade talks with Washington, but has nothing to announce about a possible meeting.
Trade tensions between the world’s two biggest economies increased in May after the Trump administration accused China of going back on promises to make structural economic changes during months of trade talks.
The US is seeking significant changes, including an end to forced technology transfers and the theft of US trade secrets. It also wants curbs on subsidies for Chinese state-owned enterprises and better access for US firms in Chinese markets.
On May 10, Trump imposed higher tariffs of up to 25 percent on $200bn of Chinese goods and took steps to levy duties on an additional $300bn in Chinese imports. Beijing then retaliated with tariff hikes on a revised list of $60bn in US goods.
The US government also angered China by putting Huawei Technologies Co Ltd on a blacklist that effectively now bans US companies from doing business with the Chinese tech giant, which is also the world’s biggest telecoms equipment maker.
Investors are now worried China will retaliate by putting US companies on a blacklist or banning exports to the US of rare-earth metals, which are used in products such as memory chips, rechargeable batteries and mobile phones.
Global ratings agency Fitch Ratings said on Monday that any such retaliatory moves would be disruptive to the US technology sector and could hurt some Chinese sectors. Fitch also said that it was too early to assess potential credit implications.
Trump acknowledged the Huawei dispute during the CNBC interview and said the issue could be addressed as part of a trade deal with China.
Deal with Mexico
The escalating trade war between the world’s two largest economies has rattled financial markets with worries that it could further disrupt global manufacturing and supply chains and push an already slowing global economy into recession
On Sunday, International Monetary Fund Managing Director Christine Lagarde said resolving the current trade tensions should be the top priority for G20 economies.
China reported on Monday that its exports unexpectedly grew 1.1 percent in May compared to May 2018 despite the higher US tariffs, but that imports fell the most in nearly three years. Some analysts suspect Chinese exporters may have rushed out shipments to the US to avoid potential new tariffs.
Many US business groups have opposed the tariffs, with companies worried about slowing demand as they pass higher prices along to consumers and manufacturers across a range of products.
Late last month, Trump said he would impose tariffs on Mexican goods if the country did not agree to take strong steps to curb the flow of mostly Central American migrants crossing the US-Mexico border.
After negotiations last Friday, the two countries reached a deal to avoid new tariffs. Mexico pledged to take “strong measures” to contain migration along the southern US border and offered to send 6,000 troops to its southern border with Guatemala.
News of the US-Mexico deal brought some relief to global stock markets on Monday, and the Mexican peso gained more than 2 percent against the US dollar, recovering some of its losses from recent weeks.
But Trump, who has embraced protectionism as part of his “America First” agenda, said on Monday the tariffs on Mexico would be reinstated if Mexico’s congress did not ratify another part of the migration pact.