On Wednesday, Donald Trump tweeted, “When you’re already $500 Billion DOWN, you can’t lose!” That claim about trade is about to be severely tested, as the White House looks to impose $100 billion more in tariffs on China, on top of the $50 billion in tariffs the administration is already seeking.
Trump said in a statement that he’s asking the US trade representative to consider an additional $100 billion in tariffs “in light of China’s unfair retaliation.” China said Tuesday it would impose $50 billion in tariffs against US products, including soybeans and cars, in response to the Trump administration’s initial decision to slap tariffs on Chinese-made goods to punish the country for intellectual property theft.
All of which sounds very much like the escalation of a potential trade war between the world’s economic superpowers.
“Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers,” Trump said in the statement, and he added that he’s instructing the secretary of agriculture to take measures to protect farmers and other agricultural interests who might be ensnared by the Chinese tariffs.
Trump also said the US “is still prepared to have discussions” with China about free and reciprocal trade and about protecting America’s intellectual property. But the president’s drastic and swift proposal to increase proposed tariffs against China doesn’t bode well for negotiations.
China also brought a challenge against Trump’s tariffs at the World Trade Organization on Thursday, which Vox’s Zeeshan Aleem notes could “set off a lengthy legal process.”
Trump tweeted Wednesday that “we are not in a trade war with China,” but the president’s latest actions are certainly following the playbook of a trade war, though the initial round of tariffs haven’t even gone into effect yet.
We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!— Donald J. Trump (@realDonaldTrump) April 4, 2018
The administration is holding a public comment period, with US industries weighing in, that will last well into May. China is also likely sitting on tariffs until the US makes a final decision.
So it’s possible the two countries will walk back from the edge. But US farmers are extremely worried, and could be hit the hardest if China continues with taxes on products such as pork and soybeans. That could do some damage to the president, and the Republican Party, before the midterm elections in states that turned out for Trump in 2016.
The stock market has also reacted skittishly to Trump’s trade policies. Dow futures plunged more than 400 points Thursday evening on the news of Trump’s extra tariffs. Wall Street seems to know what Trump might not: Trade wars are not easy to win.