Trump: Beijing will be first to buckle in trade war

Bloomberg

President Donald Trump predicted China will be first to buckle as the world’s largest economies teeter on the brink of a trade war that’s sent financial markets reeling, without indicating where his assessment sprang from.
“China will take down its trade barriers because it is the right thing to do,” Trump told his 50 million Twitter followers on April 8. “Taxes will become reciprocal & a deal will be made on Intellectual Property.”
He also said that no matter what happens, “President Xi and I will always be friends,” referring to Chinese President Xi Jinping.
The comments follow a week of rising tensions on trade, punctuated by the president’s surprise order late on Thursday that the US identify additional Chinese goods to target and Beijing’s immediate vow that it won’t back down.
Top members of Trump’s economic team, speaking on Sunday morning talk shows, defended the US threats to impose tariffs on Chinese imports and framed the moves as part of a longer-term strategy for growth—while suggesting a trade war can be averted.
“I think it’s going to generate very positive results which will grow” the economies of the US, China, and the world, Larry Kudlow, Trump’s top economic adviser, said on CNN’s “State of the Union.”

Jittery Markets
Kudlow said while he would support imposing tariffs if negotiations with China fail, nothing has happened yet. In a separate interview on “Fox News Sunday,” Kudlow acknowledged market “jitters” but said “we’re not gonna to end up in a trade war.”
Treasury Secretary Steven Mnuchin said on CBS’s “Face the Nation” that the US objective “is to continue to have discussions with China.”
Trump escalated the dispute by instructing the US Trade Representative’s office to consider tariffs on an additional $100 billion in Chinese imports, raising to $150 billion the amount of Chinese goods under consideration.
“Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers,” Trump said in a statement announcing
the move. China proposed duties on $50 billion in US products from aircraft to soybeans after the US targeted steel and aluminum imports.
It has threatened to respond proportionately and “counterattack with great strength” if the US makes good on the latest proposal.
The escalation in rhetoric pushed the S&P 500 index down sharply on Friday; it lost 1.4 percent on the week after several days of exaggerated daily swings.
Gains in US equities prices since Trump was inaugurated — which Trump, along with his family and members of his administration have regularly claimed credit for — have eroded since late January, and trade tensions have been behind some of the reversal.
The advance in the Dow Jones Industrial Average since Trump’s inauguration is now 20.7 percent, placing the former New York real estate developer in eighth position at this point
in his tenure among presidents since 1900, according to data compiled by Bloomberg.
Trump acknowledged there could be “ a little pain” ahead for the US, while emphasizing that his goal is to ensure the US emerges a much stronger country in the end.
On Friday, Kudlow said that the US and China are holding “back-channel discussions” to resolve the escalating trade dispute. And on CNN he said that ultimately the outcome of the spat “may turn out to be very benign.”
Still, White House adviser Peter Navarro, known as a hardliner on trade, said the threat of tariffs is not merely a bargaining chip.
“We’re moving forward in a measured way,” he said on NBC’s “Meet the Press.”
Navarro has said that high-level talks will take place before any tariffs will take effect, led on the US side by Mnuchin and Trade Representative Robert Lighthizer.
Trump “has a very close relationship with President Xi, and we’ll continue to discuss those issues with them,” Mnuchin said. He declined to comment on the progress of any back-channel talks with Beijing.
“You’ll know when we reach a deal there’s progress, and that’s our objective,” Mnuchin said.

US-China auto tariffs ‘stupid’ and not balanced: Trump
Bloomberg

President Donald Trump lashed out at tariffs placed on American cars sold in China, saying the trade structure disproportionately hurts the US.
In a Twitter posting on Monday morning, Trump said the current system levies a 2.5 percent tariff on every Chinese car imported to the US, while placing a 25 percent duty on cars going the other way. He assailed what he said has been an historic imbalance.
“Does that sound like free or fair trade. No, it sounds like STUPID TRADE – going on for years!” Trump said in the message.
To date, imports of Chinese-assembled cars into the US have been small but growing.
Ford Motor Co. plans to begin importing Chinese-assembled versions of it Focus model to the US next year. So far, Geely Automobiles Holding Ltd.-owned Volvo Cars started importing S60 sedans from China in 2015 and General Motors Co. has followed suit with the Buick Envision SUV and Cadillac CT6 plug-in hybrid.
Trade tensions between the two countries have intensified recently, roiling world markets. Trump in March ordered up tariffs on steel and aluminum imports and last week said the US plans to review additional tariffs on China, retaliation for what he calls decades of intellectual property theft.
China has responded with tariffs of its own on 106 products ranging from soybeans to aircraft and threatens more.