Trump follows “Not in a Trade War” with signal for a trade war

Developments on Day 441 of the Trump Administration:

Trump Unsettles Markets, US Business with Threat

Stepping up the threat of a trade war, Donald Trump calls for tariffs on another $100 billion of Chinese goods.

Two weeks ago, Trump ordered tariffs on $60 billion of Chinese products, with his officials claiming that China is stealing US intellecutal property. Beijing has responded with duties of $3 billion of American imports such as steel pipes, soybeans, and pork.

Trump said in a statement on Thursday morning, “In light of China’s unfair retaliation, I have instructed the [US Trade Representative] to consider whether $100 billion of additional tariffs would be appropriate.” the president said in a statement.

If implemented, the two sets of US tariffs would cover about 25% of the value of Chinese imports.

The statement came a day after Trump, in a contradictory pair of tweets, denied that there was a trade war and then said the US has nothing to lose by confronting China:

China, who showed caution with their relatively-limited tariffs earlier this week, signalled a harder line on Friday through the Commerce Ministry:

We don’t want to fight a trade war, but we are not afraid of fighting it.

If the United States disregards the opposition of China and the international community, and insists on unilateralist and protectionist trade practices, the Chinese side will follow through to the end and will not hesitate to fight back at any cost. We will take new comprehensive measures to respond and resolutely defend the interests of the country and the people.

The US stock market, which showed concern after the initial American tariffs, fell again yesterday. The Dow Jones futures index was down about 300 points, or 1.3%, in after-hours trading. That reversed gains during the working day, when investors welcomed a statement by Larry Kudlow, the director of the White House National Economic Council, that the tariffs are just proposals and not concrete plans.

Republican legislators were unsettled by Trump’s latest declaration. Ben Sasse of Nebraska said it was “the dumbest possible way to do this”:

Hopefully the President is just blowing off steam again but, if he’s even half-serious, this is nuts.

China is guilty of many things, but the President has no actual plan to win right now. He’s threatening to light American agriculture on fire.

The National Retail Federation said that, while it agreed on the need to address China’s unfair trade practices, “these tit-for-tat trade actions could…make it harder for Americans across the country to afford everyday products and basic necessities”.

But US Trade Representative Robert Lighthizer backed Trump’s “appropriate” statement:

China has chosen to respond thus far with threats to impose unjustified tariffs on billions of dollars in U.S. exports, including our agricultural products. Such measures would undoubtedly cause further harm to American workers, farmers, and businesses. Under these circumstances, the President is right to ask for additional appropriate action to obtain the elimination of the unfair acts, policies, and practices identified in USTR’s report.