Donald Trump-China trade deal unravels
Skepticism mounted Tuesday about President Trump’s impromptu trade agreement with the president of China, as Mr. Trump threatened new penalties against Beijing if the deal falls through. Stock markets plummeted.
White House officials acknowledged that China hasn’t fully committed to eliminate auto tariffs, as Mr. Trump announced Sunday in a tweet. Officials downplayed expectations about reaching a broader trade deal that would end the tariff war.
“It hasn’t been signed and sealed and delivered yet,” said White House economic adviser Larry Kudlow, who added later in the day that “I have no assurances” China will change its trade behavior.
Declaring himself “Tariff Man,” Mr. Trump warned China to make a trade deal or else. He said negotiations already were underway on the commitments made with Chinese President Xi Jinping over dinner Saturday during the Group of 20 summit in Argentina.
“President Xi and I want this deal to happen, and it probably will. But if not remember ... I am a Tariff Man,” Mr. Trump said in a series of tweets.
Treasury Secretary Steven T. Mnuchin said on Fox News that China would face “tariffs without reciprocal tariffs attacking us” if Beijing doesn’t meet certain commitments made at last week’s Group of 20 summit.
But Chinese officials haven’t confirmed any of their goals in the unwritten agreement, saying only that teams from both sides would follow through with more negotiations. Beijing also hasn’t publicly agreed to the Trump administration’s 90-day deadline for negotiations.
As investors confronted uncertainty, markets had one of their worst trading days of the year. The Dow Jones Industrial Average fell 799.36 points, or 3.10 percent, to 25,027.07. The tech-heavy Nasdaq tumbled 3.8 percent, to 7,158.43.
Mr. Kudlow said at an event hosted by The Wall Street Journal that he sees no recession on the horizon for the U.S. economy.
“We’re humming,” he said.
Amid the renewed tensions over tariffs, Mr. Trump held an unusual meeting at the White House with Germany’s three largest automakers Volkswagen, Daimler and BMW seeking increased investment in their U.S. facilities.
Volkswagen CEO Herbert Diess emerged from the meeting pledging to boost investment in its manufacturing plants in the U.S. He said the automaker would make a formal announcement in January or February, including the possible construction of a plant to make electric vehicles. He said VW could use idled Ford Motor Co. factory capacity.
Daimler President Dieter Zetsche said the U.S. “is the most important market for us.”
“We want to expand our business in the U.S.,” Mr. Zetsche said after the meeting.
White House spokeswoman Lindsay Walters said Mr. Trump “shared his vision of all automakers producing in the United States and creating a more friendly business environment.”
The meeting, which was not on the president’s public schedule, was hastily arranged after Mr. Trump threatened to impose tariffs of 25 percent on imported cars, trucks and auto parts. The European Union warned that it would retaliate with tariffs on U.S. products.
Commerce Secretary Wilbur L. Ross Jr., U.S. Trade Representative Robert Lighthizer, Mr. Kudlow and other administration officials met individually with executives from each of the three automakers.
Mr. Ross asked the German car manufacturers to increase production in America.
“Our trade deficit in cars and car components against Germany is about $30 billion,” Mr. Ross said, “about half of our entire deficit with Europe.”
BMW, Daimler and Volkswagen also build cars in the U.S. at plants in Alabama, South Carolina and Tennessee.
‘Let the negotiations begin’
The meeting also came just after General Motors announced it would close five factories in North America and lay off up to 14,000 autoworkers, including at plants in Michigan and Ohio. The administration has threatened to cut off government subsidies for electric cars in retaliation.
The unusual meeting between the German automakers and the president has irritated the German government, which noted that the European Union’s executive arm is responsible for negotiating trade with foreign governments.
“Responsibility for trade policy negotiations lies with the European Commission,” Steffen Seibert, a spokesman for German Chancellor Angela Merkel, told reporters. “Not with national governments. And definitely not with the auto companies.”
Mr. Trump said this week that China agreed in talks to eliminate car tariffs of 40 percent, which would be a boon to foreign automakers. Seven of the top 10 car models manufactured in the U.S. and exported to China last year were made by BMW and Mercedes-Benz.
This year, Ford Motor Co.’s Lincoln models have accounted for about half of all exports to China from American automakers.
Mr. Trump has used tariffs to force Beijing to the negotiating table over its long-standing trade abuses, including tariffs and other trade barriers, theft of intellectual property and forced transfer of technology from U.S. companies doing business in China.
The tariff tactic stoked fierce opposition among free trade advocates in the Republican Party. The opposition persists.
“Tariffs are taxes on American families,” Sen. Ben Sasse, Nebraska Republican, tweeted in response to Mr. Trump’s message dubbing himself Tariff Man.
At the G-20 dinner, Mr. Trump agreed to a 90-day delay on tariffs against China, and Mr. Xi agreed to major concessions to open its markets to American goods.
Mr. Trump’s 10 percent tariff on $200 billion of Chinese goods was set to increase to 25 percent on Jan. 1. China now has until April to make a deal or suffer the higher tariff.
Also hanging over the negotiations is Mr. Trump’s threat of tariffs on another $267 billion of goods, which would impose duties on all Chinese imports shipped to the U.S.
In the tweets, the president expressed confidence that his team, led by Mr. Lighthizer, would find out quickly whether a deal is possible.
“But if a fair deal is able to be made with China, one that does all of the many things we know must be finally done, I will happily sign. Let the negotiations begin. MAKE AMERICA GREAT AGAIN!” tweeted Mr. Trump.
The president added: “When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN.”