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Trump Doubles Down on Potential Trade War with China

Trump Doubles Down on Potential Trade War with China

President Trump said Thursday that the United States would consider slapping tariffs on an additional $100 billion in Chinese goods, escalating a potentially damaging trade dispute with Beijing.

Mr. Trump said in a statement that he was responding to “unfair retaliation” by China, which published a list on Wednesday of $50 billion in American products that would be hit by tariffs, including soybeans and pork. That move was a direct reaction to the tariffs on $50 billion in Chinese goods that the White House detailed on Tuesday.

“Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers,” Mr. Trump said, adding that he had instructed the United States trade representative to determine whether tariffs on an additional $100 billion in goods were warranted and, “if so, to identify the products upon which to impose such tariffs.”

The announcement came one day after some of Mr. Trump’s advisers tried to calm markets and tamp down fears of a trade war between the world’s two biggest economies, saying that the tariff threats were the first step in a negotiation process. Mr. Trump said in his statement that the potential for new tariffs would not preclude discussions with the Chinese “to protect the technology and intellectual property of American companies and American people,” but any new tariffs are unlikely to make that already tough task easier.

The move is a high-stakes gamble aimed at cowing China into backing down and forcing it to make the kinds of changes that the United States is seeking — namely reducing the coercive tactics American officials say Beijing uses to try to dominate leading-edge industries like artificial intelligence, robotics and autonomous vehicles. But the move could ultimately bring about the type of retaliation from Beijing that has spooked stock markets.

It also means that the United States would be somewhat more likely to place levies on Chinese products that American households routinely purchase, like furniture, clothing or shoes — an outcome the Trump administration said it sought to avoid with its initial round of tariffs.

The president’s announcement was immediately criticized by manufacturers, retailers and politicians from states whose economies depend on agriculture.

Senator Ben Sasse, Republican of Nebraska, said Mr. Trump was “threatening to light American agriculture on fire.”

“Hopefully the president is just blowing off steam again, but if he’s even half-serious, this is nuts,” Mr. Sasse said. “Let’s absolutely take on Chinese bad behavior, but with a plan that punishes them instead of us. This is the dumbest probable way to do this.”

A trade war could derail the current global economic expansion and cripple American businesses that depend on business with China. It could also further complicate geopolitical priorities given the Trump administration has enlisted the assist of the Chinese in scheduling historic talks with North Korea next month.

In a statement, Robert Lighthizer, the trade adviser who is carrying out an investigation into Chinese practices, described the president’s threat as “an appropriate response,” saying China should have responded to the initial tariffs levied by the United States by changing its behavior.

On Friday, a spokesman for China’s Ministry of Commerce accused the United States of starting the conflict and said that “the Chinese position has been made very clear. We do not want to fight, but we are not afraid to fight a trade war.”

He added that if the United States followed through with its threats, “The Chinese side will follow suit to the end and will not hesitate to pay any price and will definitely fight back. It must take a new comprehensive response and firmly defend the interests of the country and the people.”

Mr. Trump’s effort to raise the stakes on Thursday seemed poised to send financial markets spinning, with futures on the Standard & Poor’s 500-index down and the yen climbing against the dollar. Markets were tame in Asia midday on Friday, which was a holiday in China.

Companies potentially caught in the middle of a trade war called on the Trump administration to back down and try to work with the Chinese.

“The announcement that the administration may issue $100 billion in additional tariffs on Chinese products is irresponsible and destabilizing,” said Dean C. Garfield, the chief executive of the Information Technology Industry Council, which represents companies such as Amazon, Apple and IBM. “We call on both sides to halt unproductive and escalatory rhetoric, recognizing that these words and actions have global consequences.”

China experts have questioned whether Mr. Trump’s aggressive negotiating style will leave Chinese leaders with enough political room to make concessions to the Americans. Bowing to the president’s demands could be seen internally as weakness, and the changes that the administration wants — reducing China’s dominance in cutting-edge manufacturing and technology — is not something Beijing is likely to agree to.

Wang Shouwen, China’s vice minister of commerce has repeatedly refused to discuss curbing the Made in China 2025 industrial plan. The Trump administration contends that the program violates international trade rules that prohibit countries from utilizing subsidies to help exporters and discourage imports. Mr. Wang and other officials deny that the program is in violation, but have provided few details on how it might comply.

Including this most recent action, the United States would be placing tariffs on a total of $153 billion of Chinese products. The $100 billion threat came on top of the tariffs on $3 billion in Chinese steel and aluminum that he imposed last month and the tariffs on a further $50 billion in Chinese goods that he has threatened to impose in recent days.

The total is now so big that China would have trouble finding enough American goods to penalize if it sought to impose a proportional retaliation. China bought only $130.4 billion worth of American goods last year, while the United States bought $505.6 billion worth of Chinese goods.

The National Retail Federation blasted the move as a dangerous game of chicken that would put the United States on the losing end of a trading relationship that has benefited American companies and consumers.

“This is what a trade war looks like, and what we have warned against from the start. We are on a dangerous downward spiral, and American families will be on the losing end,” Matthew R. Shay, the president and chief executive of the retail group, said in a statement. “We urge the administration to change course and stop playing a game of chicken with the nation’s economy.”

The Chinese have tools other than tariffs at their disposal, including limiting the operations of American banks and other service providers in China. The government could also urge the Chinese public not to buy American-brand cars like Chevrolets and Fords, even though those are built almost entirely from Chinese-made parts and assembled in factories in China.

The largest question would be whether China would start retaliating not commercially but through geopolitical actions. While Trump administration trade officials appear to have been operating with considerable autonomy from those responsible for issues like North Korea and Taiwan, policy making is much more unified in China.

That means China could try to raise the temperature in the dispute by installing more military equipment on the artificial islands that it has recently built across the South China Sea, almost to the shores of Indonesia, Malaysia and the Philippines.

China could also step up pressure on Taiwan. Beijing leaders are already deeply upset about recent congressional approval of the Taiwan Travel Act, which urged Mr. Trump to send administration officials to the self-governing island. Beijing regards Taiwan as a breakaway province, and has threatened to use force to reunite it.

Chinese experts have made clear that they perceive the ever-larger rounds of American tariffs as part of a broad American challenge that goes beyond dollars and cents. “It is more than just a trade issue: It involves geopolitical reasons,” Wu Xinbo, the chief of the Center for American Studies at Fudan University in Shanghai, said in an interview this week. “Trump has mentioned before, if China doesn’t agree on economy and trade, the U.S. will reconsider China issues — that includes the South China Sea and Taiwan.”

President Xi Jinping of China is scheduled to give a major speech on Tuesday at the Bo’ao Forum on the Chinese island of Hainan, which may give more clues to China’s response. The speech has been billed by other Chinese officials as a moment when Mr. Xi would lay out a blueprint for China’s economic overhaul and liberalization, a potential peace offering to the Trump administration, said Scott Kennedy, a China expert at the Center for Strategic and International Studies.

“President Trump’s move may throw a small monkey wrench into Xi’s plans,” Mr. Kennedy said. “He may now need to couple such a proposal with the warning that China will continue to defend itself against foreign pressure.”

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