President Donald Trump threatened on Sunday to raise tariffs on billions of dollars worth of Chinese goods and slap wide-ranging new taxes in a high-stakes move to ramp up pressure on China to reach a trade deal.

The proposal to levy new tariffs, which would cover almost all Chinese exports to the United States, comes days ahead of the Beijing trade delegation’s arrival in Washington. This sparked fears China might delay or pull out of this week’s trade talks.

Said Mr Trump on Twitter: “The trade deal with China continues, but too slowly, as they attempt to renegotiate. No!”

Trade watchers said that the President’s pressure tactic could alienate Beijing, leaving him little choice but to follow through on his tariff threat and escalate the trade war, instead of concluding it.

“The Trump administration has resorted to the threat of tariff increases to break the logjam,” former acting deputy US trade representative Wendy Cutler told The Straits Times.

“While this tactic has met with some success to date… it could easily backfire if China decides not to send (Chinese Vice-Premier and lead negotiator) Liu He to the US this week and refuses to re-engage until the tariff threat is removed.

“If this were to occur, we would find ourselves in a serious stalemate with neither side willing to back down and President Trump having no option but to make the threat a reality, with harmful consequences not just for China, but for the US too and the global economy,” added Ms Cutler, who is the vice-president of the Asia Society Policy Institute.

Mr Trump said the 10 per cent tariff currently in place on US$200 billion (S$273 billion) worth of Chinese goods will go up to 25 per cent on Friday. This revives a hike that had originally been scheduled to take effect on March 1, but was postponed indefinitely.

Fresh 25 per cent tariffs will also be imposed “shortly” on another US$325 billion of previously untaxed Chinese goods, he said.

Mr Trump’s threatened tariffs will together cover almost all Chinese goods exported to the US, which totalled US$539.5 billion last year.

Wilson Centre senior associate for North-east Asia Shihoko Goto told The Straits Times while the tactic was aimed at forcing Beijing to capitulate, it also showed that the White House is more concerned about reducing its trade deficit with China than with addressing any fundamental change in China’s trade practices.

She added: “When it comes to the latter, the United States has a great deal of support, including other Asian countries. By threatening to increase and expand tariffs, there is concern that this tactic will be used not just against China, but against other countries that are currently negotiating deals or may look to have a deal with China in the future.”

Mr Trump’s tweets drew bipartisan support, notably from the Democrats’ Senate minority leader Chuck Schumer, who urged Mr Trump publicly on Twitter not to back down and said: “Strength is the only way to win with China.”

It remained to be seen whether Mr Trump – known for his unpredictable negotiating style – was being serious. In a tweet yesterday morning, he claimed the US loses US$500 billion in trade with China a year, adding: “Sorry, we’re not going to be doing that any more!”

The President also said that the tariffs so far had little impact on costs in the US, and were mostly borne by China, statements which economists have disputed.

Said Ms Goto: “For the US consumer, the best case scenario is that this pressure tactic will work out. Otherwise, the impact on domestic prices will be considerable.”

Tit-for-tat moves in trade dispute

2018

Jan 22: The US imposes 30 per cent tariffs on imported solar panels and 20 per cent tariffs on washing machines, hitting China and South Korea hard.

March 1: The US imposes tariffs of 25 per cent on imported steel and 10 per cent on imported aluminium.

March 22: The US says it will impose tariffs of 25 per cent on US$50 billion (S$68 billion) worth of Chinese imports, particularly electronics, in the first round of tariffs specifically targeted at China.

April 2: China imposes tariffs on US$3 billion worth of 128 US products, in response to earlier US levies on steel and aluminium. China also responds to the March 22 tariffs by drawing up its own list of 25 per cent tariffs on US$50 billion worth of specific American imports, including soya beans and cars.

June 15: The US declares it will move ahead with the 25 per cent tariff on US$50 billion worth of Chinese exports, with tariffs on US$34 billion worth of these goods to take effect on July 6 and the remaining US$16 billion later.

June 19: China retaliates by threatening its own 25 per cent tariffs on US$50 billion worth of US goods.

July 6: US and Chinese tariffs of 25 per cent on US$34 billion worth of each other’s goods go into effect.

Aug 23: US and Chinese tariffs of 25 per cent on US$16 billion worth of each other’s goods go into effect.

Sept 17: The US says it will impose new tariffs of 10 per cent on another US$200 billion worth of Chinese goods on Sept 24, which will rise to 25 per cent on Jan 1. China announces 10 per cent tariffs on US$60 billion worth of US goods.

Sept 24: US and Chinese tariffs of 10 per cent go into effect. In total, the US has tariffs on US$250 billion worth of Chinese goods, while China has tariffs on US$110 billion worth of American goods.

Dec 1: US President Donald Trump and his Chinese counterpart Xi Jinping agree to a truce. Mr Trump delays his hike of the 10 per cent tariffs to 25 per cent on US$200 billion worth of Chinese goods until March 1, 2019.

2019

Feb 24: Mr Trump postpones the March 1 tariff hike indefinitely, citing progress made in trade talks.

May 5: Mr Trump says the 10 per cent tariff on US$200 billion worth of Chinese goods will rise to 25 per cent on May 10. He threatens 25 per cent tariffs on another US$325 billion worth of as-yet untaxed Chinese goods.

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