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This Week In Trade

Trump: 'Best' U.S.-China deal would involve 25 percent tariffs on $600 billion in goods

Posted: June 10, 2019

President Trump on Monday said the best deal the U.S. could reach with China would involve 25 percent tariffs on $600 billion worth of Chinese goods, saying he would move forward with duties on another $300 billion if Chinese President Xi Jinping does not meet with him at the G20 summit in Japan later this month.

“From our standpoint, the best deal we can have is 25 percent on $600 billion,” he said after calling into CNBC on Monday morning to respond to U.S. Chamber of Commerce Executive Vice President Myron Brilliant, who had earlier questioned the president's tariff policies. Trump said he expected to meet with Xi at the summit.

In an interview with CNBC, Brilliant questioned Trump’s use of tariffs as a policy tool because it creates uncertainty for businesses and makes it more difficult to strike a deal with China. “The weaponization of tariffs -- the increase of threats on our economy on our farmers, our manufacturers, our consumers -- is going to hurt our country,” he said. “It also creates uncertainty with our trading partners, both in Europe and Japan, where we want to get deals. And, frankly, it complicates the waters to try to get something done with China.”

The U.S. has already imposed 25 percent tariffs on $250 billion worth of Chinese goods and Trump has threatened to slap another $300 billion worth of goods with a 25 percent tariff after negotiations with China fell apart last month. Brilliant said he worried that tariffs on the remaining $300 billion in Chinese goods would hurt U.S. manufacturers, farmers and supply chains and hurt stock values.

Trump, however, argued that more tariffs on China would not have a discernible effect on U.S. consumers. “China will subsidize their product because they want to keep people working. So China is going to pay a lot,” he said. “We have another $300 billion to go with China. I haven’t done that because it’s a very big thing for them, not for us. For us it’s not going to matter because we’ll be able to buy the product in other countries that don’t have the tariffs. So it’s not going to have an effect.”

The U.S. can work out its differences with China “very easily,” Trump said. Earlier in the interview, he said the U.S. and China would reach a deal because of the leverage the U.S. had created by imposing tariffs. “Tariffs are a beautiful thing when you’re the piggy bank,” he said.

“The China deal is going to work out,” he continued. “You know why? Because of tariffs. Because right now China is getting absolutely decimated by companies that are leaving China, going to other countries, including our own, because they don’t want to pay the tariffs. And China will, in my opinion, based on a lot of facts and a lot of knowledge, is going to make a deal because they’re going to have to make a deal.”

Monday marks the deadline for stakeholders to request to appear at a June 17 USTR hearing on the proposed tariffs on $300 billion worth of Chinese goods.

The Trump administration removed a hurdle -- of its own making -- to the ratification of the U.S.-Mexico-Canada Agreement by reaching an immigration deal with Mexico last week, though details are still somewhat muddled. Senate Finance Committee Chairman Chuck Grassley (R-IA) had suggested Trump’s threat to impose tariffs on Mexico jeopardized USMCA's passage.

The Mexican Senate will hold a special session next week to consider a USMCA implementing bill, President Andrés Manuel López Obrador said in his Monday press conference. The Canadian Parliament has begun its USMCA ratification process. It has until the end of next week to pass implementing legislation, as next Friday is its last scheduled session day before Canadian elections in October.

Canada must act before the U.S. to ratify USMCA because the Trump administration cannot submit implementing legislation to Congress until next month, according to the 2015 Trade Promotion Authority law. Accordingly, Canada's USMCA implementing bill includes language allowing the government to make adjustments based on U.S. actions if necessary.

On the Hill

Congress will hold three trade-related hearings this week. On Wednesday, the Senate Finance international trade, customs, and global competitiveness subcommittee will hold a hearing on China’s Belt and Road Initiative. U.S.-China Economic and Security Review Commissioners Carolyn Bartholomew and Roy Kamphausen will testify along with American Enterprise Institute scholar Derek Scissors and Center for New American Security fellow Daniel Kliman.

The House Agriculture’s subcommittee on livestock and foreign agriculture will hold a hearing on Tuesday on the state of U.S. products in international markets. The subcommittee has not yet released a witness list.

Three administration officials will testify before the Senate Agriculture Committee on Thursday during a hearing on certainty in global markets for the U.S. agricultural sector. Gregg Doud, the Office of the U.S. Trade Representative’s chief agricultural negotiator, will testify alongside Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs Ted McKinney and USDA Chief Economist Robert Johansson.

The Senate Finance Committee on Tuesday will hold an open executive session to vote on the nominations of Amy Karpel and Randolph Stayin to serve on the International Trade Commission. Karpel and Stayin would replace Irving Williamson and Meredith Broadbent, whose terms are expiring.

Events

More of what's on tap this week:

  • The Global Business Dialogue on Tuesday will discuss guidelines for evaluating a U.S.-China agreement. Panelists include
  • The Information Technology and Innovation Foundation on Tuesday will host a discussion on whether digital services taxes unfairly target U.S. internet companies. ITIF senior fellow Joe Kennedy will moderate a discussion with Freddie Wootton, second economic secretary at the British Embassy's Foreign and Commonwealth Office; Daniel Bunn, global projects director at the Tax Foundation; and Barbara Angus, global tax policy leader at Ernst and Young.
  • The U.S. Chamber will host Secretary of State Mike Pompeo and India Chief Minister Devendra Fadnavis at its 2019 India Ideas Summit on Wednesday. The U.S. last week revoked India’s Generalized System of Preferences benefits.
  • The Washington International Trade Association will host Sens. James Lankfrod (R-OK) and Chris Coons (D-DE) to discuss tariffs and trade on Thursday. A panel discussion will follow with Laura Baughman, president of the Trade Partnership and Trade Partnership Worldwide; Guy Harari, president of Adisseo North and Central America; Eric Wenberg, executive director of the Specialty Soya and Grains Alliance; and Nicole Collinson, president of international trade and government relations at Sandler, Travis and Rosenberg.
  • National Economic Council Director Larry Kudlow will discuss U.S. economic and trade policy at the Peterson Institute for International Economics on Thursday.
  • Canada’s trade policies will be scrutinized in Geneva this week as the country undergoes its trade policy review at the World Trade Organization on Wednesday and Friday. -- Brett Fortnam (bfortnam@iwpnews.com)

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