President: All China goods at tariff-risk

Trump ups ante in trade dispute

President Donald Trump escalated his trade fight with China on Friday, saying he was prepared to impose tariffs on essentially all Chinese goods imported into the United States if Beijing did not change its trade practices.

Trump, speaking aboard Air Force One on his way to Fargo, N.D., said the United States was prepared to punish China with tariffs on $267 billion in goods on top of $50 billion in Chinese imports already subject to tariffs and $200 billion in additional goods his administration was expected to impose tariffs on later this month.

The public comment period of the tariffs proposed for those imports ended Thursday, and officials said they planned to take the comments, plus those made during six days of hearings, into account before deciding which products to target. Many products purchased by consumers, such as refrigerators, spark plugs and furniture, are among the potential targets.

Trump's threat, which he made as trade talks stalled with Beijing, rattled stock markets. The president had made such comments previously, indicating that he's prepared to tax nearly all Chinese goods that come into the United States.

"Nobody has ever done what I've done," Trump said Friday.

"We've taxed them $50 billion -- that's on technology," the president told reporters aboard Air Force One. "Now we've added another $200 billion. And I hate to say that, but behind that, there's another $267 billion ready to go on short notice if I want. That totally changes the equation."

The tariffs that Trump has imposed, and threatened to impose, target a total of $517 billion in products -- more than the $505 billion in Chinese goods that entered the country last year. The president says the tariffs are needed to force China to stop stealing U.S. technology and coercing American companies to surrender their trade secrets in return for access to the Chinese market.

It's not clear why the president cited the specific figure he used. The White House did not reply to a request for comment.

The president cited the suffering Chinese stock market as an indication that the U.S. is winning the trade conflict. The Shanghai market is down roughly 23 percent in dollar terms so far this year while the Dow has risen nearly 5 percent.

"China is moving lower in their economy. The U.S. is moving higher," Lawrence Kudlow, director of the National Economic Council, said on CNBC. "We're the hottest place in the world."

Kudlow said the U.S. wants to build a "coalition of the willing" to take on China that would include the European Union, Japan and other allies. "The Chinese, you know, may find themselves more isolated if they don't come into the global process," Kudlow said in the CNBC interview.

So far this year, U.S. imports from China are running roughly 8 percent higher than during the same period in 2017. If that pace continued for the remainder of this year, Chinese imports would top $548 billion -- leaving Trump a bit short of complete coverage of Chinese goods.

Trump's decision to double-down on his uncompromising stance toward China means little chance of an early resolution of the standoff between the world's two largest economies. Additional U.S. tariffs are likely to trigger Chinese retaliation, though China's smaller volume of American imports means that it can't match Trump's tariffs on a dollar-for-dollar basis. Chinese officials may respond by subjecting American companies operating in China to unexpected tax audits, custom inspections or even consumer boycotts.

As the president readies additional anti-China trade barriers, some economists worry about the economic toll. An intensified trade war likely would hurt the U.S. more than China, according to S&P Global Ratings. By 2021, based on International Monetary Fund economic forecasts, the U.S. would lose about 1 percent of its annual output or about $230 billion while China would lose 0.6 percent of its $18 trillion economy that year or $110 billion.

"The direct economic effects of the U.S.-China tariff dispute have so far been limited. That may be about to change," wrote S&P economist Satyam Panday.

Mark Zandi, chief economist at Moody's Analytics, estimates that tariffs on $200 billion of Chinese imports, on top of previously enacted duties, would shave a quarter of a percentage point off the economy's growth over the next 12 months. It would also cost roughly 350,000 to 400,000 jobs.

While those numbers wouldn't derail the economy -- Zandi forecasts that growth would reach 3 percent this year -- "you'd start to feel it," Zandi said.

Some business groups greeted the president's latest tariff threats with dismay. "The notion that the president is going to add an extra $267 billion worth of tariffs is grossly irresponsible and possibly illegal," said Jose Castaneda, spokesman for the Information Technology Industry Council, which argues that the tariffs are not permitted under U.S. trade law.

The president spoke as his administration continued its tense negotiations with Canada over a revised North American Free Trade Agreement and as he prepared to meet with European leaders next week to ease a simmering trade dispute.

Trump, speaking Friday in North Dakota, said he believes Canada is ripping off the U.S. and repeated that, if a deal can't be reached, he'll apply a 20 percent tariff on cars. "In some countries, including Canada, a tax on cars would be the ruination of the country. That's how big it is. The ruination of the country," he said. "NAFTA has been the worst trade deal ever."

He made the comments as talks to revise NAFTA drew to a stalemate in Washington, after U.S. Trade Representative Robert Lighthizer met his Canadian counterpart, Chrystia Freeland, for the third-consecutive day.

The countries have struck a mostly positive tone, but remain at loggerheads over a handful of issues. There was no deal reached Friday and lower-level officials will continue talks but it's unclear when Freeland and Lighthizer will next meet, the official said.

The Trump administration gave notice Aug. 31 of intent to sign a trade deal with Mexico in the next 90 days, which could include Canada "if it's willing." The next deadline comes up at the end of the month, when the U.S. would need to publish the text of an agreement in order to sign it before Mexico's president-elect takes office Dec. 1.

American retailers like Target Corp. and Walmart Inc. and giant brands such as Nike Inc. and Apple Inc. so far haven't been hit that hard by Trump's tariffs. But that could be about to change, just as they are preparing for the all-important holiday shopping season.

"In one word -- disaster," said Matt Priest, chief executive officer of the Footwear Distributors and Retailers of America, an industry trade group. "Punishing my children for the crimes of my neighbors seems like a ridiculous thing for all of us to think it would be effective. But this administration thinks it's a tool that will accomplish its goals."

Over the past few weeks, companies appeared to become more aggressive in pushing back against the third round of duties on $200 billion worth of Chinese goods. Crafting retailer Joann asked customers to sign a petition or contact their representatives. Purse-maker Vera Bradley Inc. said that it would be "detrimental" to its turnaround and eliminate jobs. Target weighed in, saying families would take a hit.

In a letter earlier this week, Apple said the tariffs would affect a wide range of the company's products and goods used in the company's U.S. operations.

David French, senior vice president at the National Retail Federation, said the additional tariffs Trump floated Friday would equate to "a $70 billion tax increase on American families just in time for the holiday shopping season."

Information for this article was contributed by Alan Rappeport of The New York Times; by David J. Lynch of The Washington Post; by Josh Wingrove, Justin Sink, Matt Townsend, Hema Parmar and Janine Wolf of Bloomberg News; and by Josh Boak of The Associated Press.

A Section on 09/08/2018

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