The threat to raise taxes on virtually all of China’s exports to the United States — made in a tweet on Sunday — comes days before the two sides are scheduled to meet for a new round of trade talks in Washington.
Trump has repeatedly slammed China for indulging in what he says are unfair trade practices, particularly with regards to access to its giant market, intellectual property and technology transfers. He has said that a big trade deficit with China shows the United States is being ripped off.
The talks are aimed at settling a dispute that has hurt Chinese exporters, damaged parts of the US economy, and slowed global growth since it began last July.
The United States fired the first big salvo back then, imposing 25% tariffs on $50 billion worth of Chinese exports from the aerospace, robotics and auto industries. China retaliated with its own tariffs on American goods worth $50 billion, including agricultural products and chemicals.
Investors are nervous
Commodities were also jittery about the potential damage to growth. Oil prices fell Monday to their lowest level in a month, with US crude futures down over 1% to $61.30 a barrel. Brent crude, the international benchmark, fell 0.8% to $70.30.
“Markets are concentrating on the possible breakdown in US-Sino trade talks,” said Jeffrey Halley, senior market analyst at Oanda.
Global growth at risk
It’s not clear whether Trump’s threat indicates a tougher US position in the talks or is simply a negotiating tactic.
China’s foreign ministry said Monday that Washington had threatened higher tariffs “numerous” times in the past, adding that the countries should work towards a “mutually beneficial and win-win agreement.”
Analysts say an escalation could hit growth both economies and drag down global growth.
“Escalation of the trade war could be the trigger for weaker global growth,” said Tai Hui, chief market strategist for Asia at J.P. Morgan Asset Management. “We continue to be constructive on the US economy, but external shocks could derail such optimism.”
If Trump carries out his threat to impose a 25% tariff on nearly all of China’s exports to the United States, that could knock 0.3% off China’s gross domestic product, according to Julian Evans-Pritchard, senior China economist at Capital Economics.
“There will be a direct hit to Chinese growth,” he said, adding Beijing would likely respond with new measures to stimulate the economy.
Sherisse Pham and Steven Jiang contributed to this report.
Source : Nbcnewyork