White House expects China to retaliate over trade tariffs
May 13 2019
In a remarkable break from his boss' rhetoric, President Donald Trump's chief economic adviser Larry Kudlow conceded that U.S. businesses and consumers are the ones who have to pay up for the hike in Chinese import taxes.
It said Beijing's doors were open to talks but it would not yield on important issues of principle.
In an interview with Hong Kong-based Phoenix TV, Liu He, the Chinese vice-premier, said that there had been "minor setbacks" in talks with the United States but dismissed claims they have broken down. "We have to do this", White House economic adviser, Larry Kudlow, said in an interview with Fox News.
"Markets have grown less optimistic about the US-China trade negotiations after some news reports from China's state-run media suggested a harder stance, " said Mayank Mishra, macro strategist at Standard Chartered Bank in Singapore.
On Friday, Mr. Trump raised tariffs from 10% to 25% on $200 billion of Chinese imports, ramping up escalations in trade war that appeared to be subsiding as a negotiators worked towards a deal.
Mr Kudlow said nothing has been scheduled, but Chinese officials have invited US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to visit Beijing. "The Chinese will suffer GDP losses and so forth..."
China strongly opposes the latest US tariff hike, and has to respond to that, Liu told reporters on Saturday.
"Fair enough. In fact, both sides will pay in these things, and of course it depends", he said when asked "if it's a tariff on goods coming into the country, the Chinese aren't paying". And what could that mean for economic growth around the world?
The latest talks ended on Friday with no word of progress after Washington accused Beijing of trying to backtrack on earlier commitments. "China has promised retaliation and we could see them outline further tariffs on U.S. exports in the next couple of days as well as the possibility of non-tariff barriers".
"Such an easy way to avoid Tariffs?" the US leader said, "Make or produce your goods and products in the good old USA".
"Both sides will pay", Kudlow said when pressed on the issue.
"China will not only act as a kung fu master in response to U.S. tricks, but also as an experienced boxer and can deliver a deadly punch at the end", Wei told the South China Morning Post, adding that the world's second largest economy is prepared for an extended trade war with the US.
Imposing those tariffs would impact a wide range of consumer goods - clothes, shoes, toys, and electronics such as iPhones - that have been mostly exempted so far and could prompt steep cost increases that many Americans would likely notice. Having blamed the setback on China, which allegedly demanded that some of the previously agreed terms be renegotiated, Trump has praised his tariff hike as "easier and quicker" than making a deal.
"We would like to see these corrections in an agreement which is codified by law in China, not just a State Council announcement".