Economy

Trump warns China: Deal now or it will be far worse

Trump warns China: Deal now or it will be far worse”

In a remarkable break from his boss' rhetoric, President Donald Trump's chief economic adviser Larry Kudlow conceded that United States businesses and consumers are the ones who have to pay up for the hike in Chinese import taxes.

White House economic adviser Larry Kudlow clarified that China does not "pay" tariffs imposed by the United States on billions of dollars of imported goods, but said "both sides will suffer".

The toughening stances on both sides in their trade war showed that the two powers are ready to play hardball to protect their national interests.

"It " s not China that pays the tariffs, it " s the American importers, the American companies that pay what, is in fact, a tax increase", he said.

After the near collapse of trade talks with China last week, Mr Trump on Friday imposed a hefty duty on import of Chinese products from 10 per cent to 25 per cent worth more than Dollars 200 billion and asking for a similar increase on tariff on the rest of the Chinese import of over USD 300 billion. The administration has already hit $50 billion of additional Chinese goods with 25% duties. "Buyers of product can make it themselves in the U.S. (ideal), or buy it from non-Tariffed countries".

The Chinese foreign ministry said on Monday the country will never surrender to foreign pressure after Washington renewed its threat to impose tariffs on all Chinese imports in an escalating trade dispute.

"So if you need that new iPad, it is you who will be paying the import duty, not some worker in China", Weinberg wrote in a research note.

USA importers pay tariff charges, though large retailers might be able to force some Chinese suppliers to cut their prices to offset the duties.

Many observers have suggested Trump seems not to understand the economic impact of tariffs.

There are many other sources of tension ripe for flare-ups: US military aid to self-ruled Taiwan, Chinese territorial claims in the disputed South China Sea, US criticism of Beijing's Belt and Road global infrastructure programme, and US security warnings against Chinese telecom champion Huawei.

"This is a risk we should and can take without damaging our economy in any appreciable way", Kudlow said.

"The expected countermeasures have not yet materialised. We may know more today or even this evening or tomorrow", he told "Fox News Sunday".

Both sides have indicated that future talks are likely.

The abruptness of Trump's May 5 announcement made companies see doing business in China as more uncertain, said Parker of the U.S.

Kudlow told Wallace that Trump and China's President Xi Jinping could meet next month on the sidelines of the Group of 20 summit in Japan to discuss their differences on trade, but no new talks are scheduled.

"I think that China felt they were being beaten so badly in the recent negotiation that they may as well wait around for the next election, 2020, to see if they could get lucky & have a Democrat win", Trump tweeted Saturday. Having blamed the setback on China, which allegedly demanded that some of the previously agreed terms be renegotiated, Trump has praised his tariff hike as "easier and quicker" than making a deal.

Vietnam is emerging as a major beneficiary of the trade war, with a string of American companies operating in China seeing the nation as the top choice for relocation.



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