Trump to Hike Tariff Rate on $200 Billion in Chinese Goods: Two Tweets Two Lies

-edited

Trump announced in Tweets he is hiking tariffs on China. He told two lies in those Tweets. There's an implied third lie.

Supposedly, trade talks with China are going "really well". The talks are going so well that Trump Says He Will Increase Tariffs on $200 Billion of Chinese Goods.

President Trump said Sunday that he planned to increase tariffs on $200 billion of Chinese goods to 25% from 10% on Friday, as negotiations for a U.S.-China trade deal are set to resume on Wednesday.

“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” he tweeted.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin concluded high-level trade talks in Beijing last week. Those talks are set to resume on Wednesday when Chinese Vice Premier Liu He leads more than 100 officials from more than a dozen government agencies to Washington—a sign Beijing thinks final details can be ironed out, according to people close to the talks.

The Chinese Embassy in Washington didn’t immediately respond to requests for comment. Mr. Trump’s announcement came in the middle of the night Beijing time.

Trade Talk Timeline

Trump has changed his tune on a trade deal with China so many times it's hard to count.

  1. In December, Trump gave China 90 days to conclude a deal Otherwise. Trump said he would boost tariffs on $200 billion of Chinese goods to 25% from the current 10%.Those 90 days ended March 1.
  2. On December 31, I noted Trump Hails "Big Progress" on Trade Deal With China. I commented "Supposedly there is 'big progress' on a comprehensive trade deal with China. Color me skeptical."
  3. On January 19, I noted China Pledges US Buying Spree to Reduce Trade Surplus With US to Zero By 2024. I commented "In discussions that are not yet public, and will likely be empty promises, sources say China Offers a Path to Eliminate U.S. Trade Imbalance."
  4. On February 22, the Washington Post reported Trump says he expects to meet with China’s Xi and finalize new trade deal but Trump would not rule out extending the deadline beyond March 1.
  5. On February 24, Trump Tweeted there was "substantial progress on intellectual property" and suspended tariffs.
  6. On February 25, I noted Hooray! "Substantial" Progress With China (Just Don't Ask Where) in response to Trump's Tweets.
  7. At the end of February, Trump expected a small delay in signing.
  8. On March 2, I noted Trump Assails WTO "Straitjacket", Attempts Pocket Veto of Entire Organization.
  9. On March 12, the Washington Post stated U.S. Trade Representative Robert E. Lighthizer told the Senate Finance Committee “Our hope is that we are in the final weeks” of negotiations. However, Schumer said on the Senate floor, “It is abundantly clear that China is playing us.”
  10. On March 13, Trump stated that he is in No Rush to Complete China Trade Deal. “I think things are going along very well - we’ll just see what the date is,” Trump told reporters at the White House.
  11. On March 14, Bloomberg reported China and U.S. to Push Back Trump-Xi Meeting to at Least April
  12. On April 4, I commented No Foolin' This Time We're Close, Really Close to Trade Deal With China
  13. On April 15, I posted Trump Asks China to Shift Soybean Tariffs to Something Else.
  14. On April 17, I noted Postponed Again: Trade Deal With China Now "Tentatively" Set for May 27 or June
  15. On April 29, I posted Senator Grassley Warns "Trump’s Tariffs End or His Trade Deal Dies"

Question of the Day

I understand it takes time to work out trade deals.

But how many times can one change the target date while citing "huge progress" and not look foolish?

Trump has over-promised and under-delivered on every trade discussion, not just with China.

Two Tweets, Two Lies

Lies of the Day

  • Tariff payments are responsible for 0% of "great economic results". Rather, Trump's tariffs, or if you prefer, retaliatory tariffs devastated US farmers.
  • Costs are not borne by China. Rather, costs are bore by US consumers and businesses that import from China, Mexico, etc.

Yes, the trade talks are going slow.

Implied Third Lie, Just Not Today

Trump's comment that trade talks are going slowly is an admission that trade talks were not really going as well as previously claimed.

The changing timeline and today's tariff increases are further proof.

What to Make of Today's Tweets

It's difficult to know precisely what to make of today's Tweets. We will not know until we see how China reacts.

  1. If China pulls back or increases agricultural tariffs, it means China has had enough of Trump's BS.
  2. If the trade talks continue without retaliation from China, it means this is a political ploy that China is willing to go along with.

Option Two Likely

I suspect we are dealing with option two.

If so, China has agreed in advance to go along with this BS. Trump will then announce that his increase in Tariffs are what closed the deal.

My base position has not changed one iota:

  • There will be a deal. It will be hyped as the greatest trade deal in history.
  • Mostly, the deal will return to the status quo of China buying more soybeans and other agricultural products.
  • Any other benefit that allows Trump to brag was just something that China was willing to do all along, without all this hype and theatrics.

Mike "Mish" Shedlock

Comments (66)
No. 1-25
Casual_Observer
Casual_Observer

The deal is the deal will be constantly renegotiated.

Ted R
Ted R

The truth is that the U.S. needs to greatly reduce its dependence on Chinese money to finance our deficits and everything else we use Chinese money for. Balance the damn budget.

Carl_R
Carl_R

Q: How do you tell if a politician is lying?

A:His/her lips are moving.

Sechel
Sechel

trump says with one breath that talks with china are going well and in the other breadth we need to increase tariffs. both statements cannot be true. what seems true is that trump is both eager for a deal and eager to have the public believe negotiations are going well. if anything trump sounds desperate feeling the need to both raise tariffs and drop his conditions on intellectual theft

another point that fails to come out enough is that Trump is not prepared to drop all his tariffs which complicates negotiations with China

lol
lol

Big gov't desperately needs the cash,DC burnin through cash like a hot knife through butter,raise tariffs or raise taxes.....your choice!

Menaquinone
Menaquinone

President Donald Trump is proceeding to repatriate manufacturing to the USA. More power to him. Any business without such plans must perish. Japanese corporations have allocated $30 billion to relocate manufacturing into the USA. Boeing et.al. will soon learn that parts manufactured in China are too expensive. Stick a fork in Walmart. The short term tariff inflation will devalue wages to what a dindu is worth.

Realist
Realist

”If the trade talks continue without retaliation from China, it means this is a political ploy that China is willing to go along with.”

This would be very uncharacteristic of China. They do not respond well to bullying, whether real, or staged (as you imply). This appears to be Trump saying something stupid (again) without any concern for the consequences. Or it could be his way of misdirection from some other big problem.

Assuming he actually follows through with the tariffs on Friday, that could be the black swan event that could tip the US into recession later this year.

Of course, he could also send out a tweet tomorrow, saying ”just kidding”. It’s pretty hard for businesses and individuals to plan for the future when you have a President who changes his mind so frequently.

Menaquinone
Menaquinone

As the ruble revalues this week the Russian people can decide whether Putin's excursion into Venezuela is worth their suffering. 20% of the Russian population survive on less than $200/month. 40% is doable.

thimk
thimk

politics 101: 1.) solve a crisis/situation you created. 2.) bask in the limelight

Esclaro
Esclaro

I love how Trump says China is paying the import tariffs. Wrong! US consumers are paying the tariffs. Just like they are paying for the wall he said Mexico would pay for. He is a lying scumbag trusted by by no one and hated by all.

Maximus_Minimus
Maximus_Minimus

All European countries have a sales tax (VAT) which acts a as effective tariff, because they can compensate by cutting corporate taxes for domestic companies. China has no beef with this since taxation is a sovereign domain. Trump cut corporate taxes without a corresponding countervailing tax, blowing up the deficit. Now comes the tariffs which only the US consumers pay, and China will certainly retaliate. Most Earthlings look at the US politics as some kind of ritualistic dance that they have no chance to understand.

Casual_Observer
Casual_Observer

China is now threatening to balk at any more talks. North Korea is firing missiles and US ships are moving to counter Iran's threatening moves in the middle east. It seems a new war is only a few days from being possible.

wootendw
wootendw

"If so, China has agreed in advance to go along with this BS. Trump will then announce that his increase in Tariffs are what closed the deal."

But that will make it look as though China caved in to Trump. Will China go along with that? China doesn't have to worry about voters. And even if they did, most Chinese would probably blame US rather than their leaders. And they can probably withstand hardship better than Americans can.

mark0f0
mark0f0

@Menaquinone Sure, that's the 'plan', but there's been little to no action on the part of Trump or Congress towards such. Not only does the US have to get its cost of government and overall public taxation burden down to the levels of foreign manufacturers to be competitive, but it also has to convince US workers to accept things such as actually living next door to factories so that bicycles can be ridden to work. Or living in factory-attached dormitories. Because that's what Chinese workers are willing to do, which gives them an absolutely enormous structural cost advantage over the typical US factory worker that probably has an hour-long commute in a F-150 daily.

mrutkaus
mrutkaus

Mish says it but generally tariffs I think are not understood. Trump is not imposing tariffs on the Chinese, he is imposing tariffs on US, US citizens pay them, not the Chinese. He is taking $$ from our paychecks and Social Security checks, the Chinese are not paying for anything.

Sechel
Sechel

i doubt trump really intends to go through with this. republicans in the senate are starting to voice their frustration with trump on trade. Grassley who is not uninfluential has signaled his patience is at an end and Trump is telling his team to back off on china's intellectual theft.

Menaquinone
Menaquinone

Chinese pay the tariff. Americans do not. Smart Americans will purchase untariffed made in USA substitutes because they cost less. Smart Chinese will move their factories to USA and hire Americans. Win Win for USA. Lose Lose for China. President Trump is a genius negotiator. The jobs are coming home.

Boot6761
Boot6761

I would take a close look at what firms traded the downside of the open this morning? Mnuchin most likely had all of his Wall Street cronies in the loop...including Goldman, on the announcement...the Smart money says that those who traded the downside open this morning were in the know...

RonJ
RonJ
Tariff payments are responsible for 0% of "great economic results". Rather, Trump's tariffs, or if you prefer, retaliatory tariffs devastated US farmers.
Costs are not borne by China. Rather, costs are bore by US consumers and businesses that import from China, Mexico, etc.

Left out is the cost to American workers, of the closure of 60,000 American factories.

Undercover Boss did a Program on Peavey. After the program was taped, the company shut down the factory and moved production to China. The production workers featured in the show lost their jobs.

stillCJ
stillCJ

Editor

Trump is certainly allowed to change his mind about things as circumstances require. The one thing I think he was really wrong about is "good trade deals are easy to negotiate". Especially with the Chinese!

Blacklisted
Blacklisted

Who said the yuan had to be next reserve currency in order for the dollar to stop being the reserve currency? Why can't a hybrid, like the SDR, be the next step in the cycle? Something will be done in a couple of years as the dollar soars when the euro and yen implode.

China will be ready by 2032 to take over the reigns of economic power. Look at what they have been doing with the Belt and Road Initiatives. They partner with countries to bring about collaborative success, while the US has to overthrow leaders and start wars to prevent them from accomplishing their goals. China build roads, railways, and shipping routes from Brazil through Guyana and expands the Panama Canal to prepare for their growing economy. What does the US do? Tries to take over Venezuela to stop China's progress. Why doesn't the US simply compete? I'll tell you why. It's been much easier to simply squash and eliminate the competition, just as has been done in the healthcare industrial complex. China is building bridges and we are destroying them, along with the trust and confidence that's needed to attract capital.

JOHN_5
JOHN_5

The pundits, and china, thought Trumo was lying about raising tariffs to 25% too, but he did. Great negotiators are unpredictable. That twitter post puts pressure on china during Thursdays meeting. Trump knows the threat of irrationality, and the ability to follow through, makes him formidable. Be grateful he is the one on the front-lines negotiating this deal, instead of politicians who don't understand business, don't understand foreign relations, and can barely grasp "basic" public policy.

Harbour
Harbour

Aren’t tariffs a form of consumption tax? Isn’t that the fairest tax? :D

coffeebeanah4
coffeebeanah4

free trade cannot be one sided.If any industry complains that China is restricting their markets to our products we must immediately retaliate. I have no sympathy to people who complain that we will have to pay more for our appliances and electronics at Walmart.We are selling our future for cheep appliances How stupid can we be?.