In a surprise announcement on Twitter, U.S. President Donald Trump said on May 5 that tariffs on $200 billion worth of Chinese goods will increase to 25 percent, from the current 10 percent, beginning May 10.
Trade negotiations between U.S. and Chinese officials had been continuing in hopes of reaching an agreement.
Trump’s Tweets
In his Twitter post, Trump criticized the trade talks for progressing too slowly, “as they [China] attempt to renegotiate”—then capped off his message with an assertive “No!”Trump’s decision comes as a shock, as many hoped that both sides could finalize an agreement by May 10, after China’s top trade envoy, Vice Premier Liu He, arrives in Washington with his delegation for the 11th round of trade talks on May 8.
A Tactic?
After Trump made his Twitter announcement, Tom Orlik, chief economist at Bloomberg, told the BBC in an interview that the move was likely a negotiation tactic.“More likely, in our view, is that this renewed threat is an attempt to extract a few more minor concessions in the final days of talks,” he said.
The U.S.–China trade dispute kicked off in March 2018, when the Trump administration criticized the Chinese regime for its agenda of stealing intellectual property (IP) from U.S. companies, arguing that it damaged the U.S. economy.
The United States first imposed tariffs on $50 billion worth of Chinese goods as a punitive measure. The Chinese regime quickly retaliated with tariffs on roughly $34 billion worth of U.S. goods, mostly agricultural products.
The U.S. administration then imposed 10 percent tariffs on $200 worth billion of Chinese goods, ranging from chemicals to textiles and consumer goods, in September 2018.
The White House then gave a January 1 deadline for trade talks to succeed. If an agreement couldn’t be reached then, the administration would increase all tariffs to 25 percent.
But in December, on the sidelines of the G-20 summit, Trump and Xi agreed to a 90-day truce, in which Beijing promised to import more U.S. agriculture and energy products, and crack down on illegal fentanyl coming into the United States. Meanwhile, the U.S. side promised not to escalate the tariffs.
The negotiating period was prolonged in March after officials from both sides said trade talks reached a breakthrough.
So far, the trade dispute has cost the Chinese economy.