“The American worker is getting killed by this," former vice president Joe Biden said Monday on WMUR, a New Hampshire radio station. "The American farmers are getting killed.”
In a matter of days, a trade deal Trump had said was “95 percent” finished imploded, with the White House placing steep tariffs on $200 billion in Chinese products, and the Chinese government retaliating with tariffs on $60 billion in American goods. On Monday, prospects of a cease-fire appeared slim when Trump announced that he was preparing to expand U.S. tariffs to cover all $540 billion in Chinese imports. This could interrupt the global economy and raise prices on everyday products such as cellphones and sunglasses.
But in a Tuesday morning tweetstorm, Trump said that a deal was still within reach and that relations between the two nations could recover.
“My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn’t make any sense,” Trump tweeted Tuesday.
This marked a continuation of assurances Trump tried to give Monday night, when he told a group gathered at the White House that he would know in three or four weeks whether a deal could be reached.
“I have a feeling it’s going to be very successful,” he said.
There were signs on Tuesday that his approach with China remained very fluid, consistent with the multiple strategies he has laid out for the public in the past week. He said, for example, that one of the best ways for the United States to counter China’s behavior would be for the Federal Reserve to cut interest rates.
“If the Federal Reserve ever did a ‘match,’ it would be game over, we win!” he wrote. Trump has been trying to pressure the Fed to cut interest rates for weeks, although he has never used this argument before in relation to China and trade.
In other tweets Tuesday, Trump seemed to be goading Beijing into making a deal before the situation worsened, repeating warnings that U.S. companies were likely to move operations outside China and take their business to countries not subject to tariffs. He also claimed that the revenue from the tariffs would be used to protect farmers from the effects of the trade war, and said that tariffs he imposed last year had “rebuilt” the steel industry.
Trump imposed tariffs on steel and aluminum imports from a range of countries, including Canada and Mexico. The United States doesn’t import much steel or aluminum from China, but Trump has alleged that his actions targeted Chinese production.
Although the metal tariffs helped U.S. steel companies increase revenue because their competitors’ costs rose, a number of U.S. companies said their expenses also escalated because they rely on foreign production. In October, Ford chief executive Jim Hackett said higher steel prices would cost the automaker an estimated $1 billion, even though it acquires most of its steel and aluminum from U.S. companies. It projected that global tariffs would cost the company $700 million in 2019, according to Reuters. The Council on Foreign Relations predicted that the high costs from the steel tariffs could trickle down to American workers, leading to more than 40,000 job losses.
Trump has vacillated between vowing to dig in against China and predicting that a deal between the two countries could be weeks away. He also has argued that only China would feel the effects of a trade war, and not the United States. But if Trump did levy a 25 percent tariff on all Chinese imports, U.S. economic output would shrink by at least $120 billion “as companies would have to rebuild entire supply chains,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in an investor note.
Corporate earnings, the key to stock prices, would drop about 10 percent, he added.
Still, Trump tweeted that the United States is “in a much better position now” than if a deal had been reached, but still stressed that “China wants a deal!”
With hopes fading for an early resolution of the year-long U.S.-China trade dispute, the president said he would meet the Chinese president at the Group of 20 summit in Osaka, Japan, on June 28-29. Treasury Secretary Steven Mnuchin told CNBC that the two sides remain in “ongoing” negotiations.
The prevailing tension and uncertainty sent U.S. stock markets tumbling Monday. The Dow Jones industrial average, which was down 719 points at its low, ended the day down more than 617 points, or 2.4 percent, to close at 25,324.99. All 30 Dow stocks lost ground.