White House Doubles Down on Tariff Strategy

May 10, 2019  | 4 min  | Ep4438

Before prices on Wall Street and LaSalle Street took a beating, President Trump took to social media to threaten China with more tariffs and deflated hopes of a deal. As the week progressed, the weekend tweet was put into context and the threat set the table for China’s visit to Washington.

Peter Tubbs has more.

The White House doubled down on its strategy of negotiation by boosting tariffs on imported goods early Friday morning.

The nearly year-long dispute with China over trade negotiations has led to making good on a threat to hike tariffs on items purchased by American manufacturers and consumers.  Over 6,000 different items, as varied as seafood, industrial raw materials, appliances and tractor parts, have been tariffed at a 10 percent rate since September of 2018.

The Trump Administration has now increased tariffs on the $200 Billion in Chinese imports to 25 percent.

At a Wednesday campaign rally in Florida, The President blamed the impasse on changes to the deal China requested earlier in the week.

President Donald Trump: “By the way, you see the tariffs we are doing? Because they broke the deal. They broke the deal. They broke the deal! So they are flying in the Vice Premier tomorrow, is flying in, good man. But they broke the deal! They can’t do that. So they’ll be paying, they broke the deal. Nothing wrong with taking in over $100 Billion dollars a year. $100 Billion. We never did that before.”

The billions in tariff dollars come from the checking accounts of American importers and manufacturers, and the increased costs are often forwarded to consumers. While the monthly trade deficit with China has shrunk to a five-year low, the trade deficit with the world grew $50 billion - 1.5 percent - in March.

The increased tension comes a week after both sides appeared confident that progress had been made in the negotiations. The Chinese delegation informed their American counterparts early this week that issues involving Chinese law were now off the table, a reversal of their earlier position.

Activation of the proposed 25 percent tariffs also brought a threat of added duties on all Chinese imports not currently tariffed. In response, Chinese leadership has threatened a broadening of its tariffs on American imports.

Midwestern grain producers have borne the brunt of the Chinese retaliatory tariffs. Duties on corn, soybeans and wheat resulted in a dramatic drop in agricultural exports starting late last year.

In a Friday morning flurry of tweets the President proposed using tariff revenues to buy surplus grain and donating it to food insecure countries. Analysts were quick to note that actions like this are considered dumping by the WTO.

President Donald Trump, Council Bluffs, Iowa, October 9, 2018: “With China, over the last 5-6 years, we’ve been losing 300-500 Billion dollars a year. Billion! Nobody knows even what the hell it is it’s so much. It’s ending, it’s ending.”

An aggressive stance on trade was part of the President’s campaign pitch, and remains an applause line at appearances.

Republicans are maintaining strong support for the White House even as their supporters bear much of the economic costs of the dispute.

Senator Charles Grassley:  “Well for every farmer there is a different answer. But until I start hearing from farmers who say that they voted for Trump and they are done with him, I haven’t heard that yet. I think that they have patience.”

Despite the setback, negotiations are expected to continue.

For Market to Market, I’m Peter Tubbs.

Grinnell Mutual Insurance