By Lingling Wei in Beijing and Jacob M. Schlesinger in Washington
The Chinese government announced plans Tuesday to impose new
tariffs on $60 billion in U.S. exports, prompting President Trump
to reiterate a threat to punch back by hitting Chinese goods worth
more than four times that much.
Beijing also weighed whether to stick with plans for upcoming
bilateral talks aimed at easing the conflict of retaliation and
counter-retaliation, escalated by President Trump's Monday
announcement of new import taxes on $200 billion in Chinese
goods.
Mr. Trump responded to China's $60 billion pledge later Tuesday
by declaring that "if there's retaliation against our farmers and
our industrial workers and our ranchers, if any of that goes on we
are going to kick in another $257 billion." He added: "We don't
want to do it, but we'll probably have no choice."
People familiar with administration plans said they expected Mr.
Trump to issue a formal statement over the next few days directing
U.S. Trade Representative Robert Lighthizer to begin the process of
crafting the next tranche of tariffs that, if fully implemented,
would cover virtually all imports of Chinese goods, which totaled
$505 billion in 2017.
While the threat of more tariffs might intensify the rhetorical
pressure on Beijing, these people stressed, the actual
administrative process -- including holding public hearings,
receiving written public comments, and conducting internal impact
studies -- would take weeks before any fresh measures would take
effect.
Mr. Trump Tuesday told reporters he was eyeing tariffs on an
additional $257 billion in Chinese goods, but the statement he
issued on Monday said it was $267 billion. An administration
official said the White House statement citing the $267 billion
figure accurately described the policy.
The next round would be far more politically and economically
perilous, covering a range of consumer goods -- from electronics to
toys -- that have largely been spared so far.
Further tariffs may be meted out in stages and may not extend to
all imports. People familiar with the process noted that the U.S.,
in response to industry complaints, took nearly 300 products off
the list of those subject to the tariffs announced this week,
saying that shows an openness to arguments that duties would cause
too much pain in specific circumstances.
One factor that could shape the path of future tariffs would be
whether the countries resume high-level trade talks. Such talks
were launched in the spring after Mr. Trump first threatened taxes
on Chinese goods, but broke off after the U.S. implemented a first
round of duties in July.
Treasury Secretary Steven Mnuchin has been trying to restart the
discussions, and a series of Washington visits by Chinese officials
had been scheduled for the next few days.
Shortly after the White House's announcement late on Monday, the
Chinese leadership's economic troubleshooter, Vice Premier Liu He,
huddled with his top lieutenants to devise a response, according to
officials briefed on the matter. On the agenda was whether Mr. Liu
or lower-level officials should go ahead with those travel plans.
China's Commerce Ministry, in a brief statement midday Tuesday,
said the U.S. tariffs create "new uncertainty" for
negotiations.
The Chinese leadership faces a dilemma as the world's two
largest economies pitch closer to a full-bore trade war. President
Xi Jinping has banked his popularity and strongman reputation on
turning China into a global power and can't afford to back off,
instructing officials to stand firm and punch back in
negotiations.
Yet Mr. Xi has also ordered his officials to keep engaging with
Washington and American businesses, according to Chinese officials
and government advisers, a stance seen as addressing concerns that
a spiraling trade fight could harm an already slowing economy and
derail China's economic growth prospects.
An option being considered, the officials said, involves sending
a lower-level trade official -- Vice Minister of Commerce Wang
Shouwen -- for talks this month, sparing Mr. Liu. Under the
original plan, lower-level talks were to take place this week ahead
of Mr. Liu's trip to Washington late next week. As of late Tuesday,
no final decisions were made on the issue, according to the
officials.
An ally of Mr. Liu's vented Tuesday about the pressure from
Washington. "Negotiations can't be done with this kind of tactic,"
Fang Xinghai, vice chairman of the China Securities Regulatory
Commission, said at a World Economic Forum meeting in the coastal
city of Tianjin.
"It may work with some small country," he said. "It doesn't work
with China." The new U.S. tariffs, he added, have "poisoned the
atmosphere for negotiations."
Voices have been rising in Chinese policy circles in recent
weeks saying that Beijing should wait to negotiate until after the
November midterm elections. Many Chinese officials think President
Trump isn't ready to cut a deal, is bashing China now to appeal to
his political base and may be more willing to negotiate after the
elections.
Mr. Trump signaled in a pair of tweets Tuesday that he would
seek to use Chinese retaliation to rally his supporters in the fall
campaign, portraying Beijing's tariffs as a policy of "actively
trying to impact and change our election by attacking our farmers,
ranchers and industrial workers because of their loyalty to
me."
For all of Mr. Trump's rhetoric, his advisers say they are aware
of the perils of moving forward quickly with tariffs on the
remaining Chinese imports. They note that it took two months from
the presidential order to explore tariffs on $200 billion to
putting them in effect.
The trans-Pacific commercial conflict was launched in March,
when the Trump administration issued the results of an
investigation accusing China of unfair trade practices, especially
pressuring American companies to turn over valuable intellectual
property to gain access to the Chinese market.
Mr. Trump used that study to justify tariffs on Chinese imports,
part of a broader effort to pressure Beijing to change those
practices and to take steps to cut its trade surplus with the U.S.,
which totaled $336 billion last year.
While both sides exchanged tariff threats through the spring,
they held off on executing those threats, as Messrs. Liu, Mnuchin,
and others held a series of talks aimed at staving off the duties.
After those meetings ended inconclusively, Mr. Trump followed
through over the summer with a first round of tariffs on $34
billion in Chinese goods, then a second round on $16 billion.
The Chinese each time responded with tariffs on an equal amount
of U.S. goods. Following each round of China retaliation, Mr. Trump
directed Mr. Lighthizer to launch the process for imposing tariffs
on still more Chinese goods. That led to the president's June 18
order to explore a third tranche of tariffs on $200 billion in
Chinese goods -- the process that ultimately led to this week's
announcement finalizing those tariffs, to take effect Sept. 24.
With China's Tuesday announcement of its own third round, the
cycle is now repeating itself, with Trump aides readying new
retaliation to the retaliation.
Mr. Trump feels he has the upper hand in that fight because the
U.S. imported more than $500 billion in Chinese goods last year,
while China imported just $130 billion from the U.S., meaning
Beijing is running out of U.S. products to penalize.
Vivian Salama in Washington, Chao Deng in Tianjin and James T.
Areddy in Shanghai contributed to this article.
Write to Lingling Wei at lingling.wei@wsj.com and Jacob M.
Schlesinger at jacob.schlesinger@wsj.com
(END) Dow Jones Newswires
September 18, 2018 18:34 ET (22:34 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.