China to retaliate on $60B in U.S. goods, defying Trump's warning

President Donald Trump warned China on Monday of dire consequences if it does not agree to a deal to end an escalating trade war, making a personal appeal to President Xi Jinping and accusing Beijing of backing out of a “great deal” last week.

“I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries,” Trump said in a tweet. “Too expensive to buy in China. You had a great deal, almost completed, & you backed out!”

In a flurry of early morning tweets, the president pushed back on his trade advisers’ admissions that U.S. consumers will ultimately pay the price for tariffs on Chinese goods while calling on U.S. manufacturers to buy goods from non-tariffed countries. While Trump has frequently asserted that U.S. tariffs on a country will amount to direct deposits into the U.S. Treasury, in reality, the tariffs are taxes paid by importers, such as U.S. companies, which bring in products from China. Those costs are typically passed on to consumers in the form of higher prices, which can drive down demand for Chinese imports.

Trump warned that should China retaliate with tariffs of its own following increased penalties from the U.S. that went into effect Friday, as it has warned it will do, “many Tariffed companies will be leaving China for Vietnam and other such countries in Asia,” predicting that the trade war “will only get worse” for Beijing.

“Their [sic] is no reason for the U.S. Consumer to pay the Tariffs,” Trump wrote, noting that the tariffs will affect goods shipped from China beginning Monday. He appeared to cite data showing that China has ultimately borne the brunt of the cost of his trade war, a position that has been disputed among economists.
 

Their is no reason for the U.S. Consumer to pay the Tariffs, which take effect on China today. This has been proven recently when only 4 points were paid by the U.S., 21 points by China because China subsidizes product to such a large degree. Also, the Tariffs can be.....

— Donald J. Trump (@realDonaldTrump) May 13, 2019

The social media barrage came as his administration's trade dispute with China has escalated after the two sides failed to reach a deal last week. The president's Twitter spree also followed one day after his top economic adviser conceded that the impasse would in fact hurt both sides in the trade war before the situation gets better.

“Both sides will suffer on this,” White House chief economic adviser Larry Kudlow said on “Fox News Sunday,” insisting that the “terrific shape” of the economy would dampen the impact of a trade war. “This is a risk we should and can take without damaging our economy in any appreciable way,” he added.

Trump has sought to project optimism in the face of this latest salvo with China, touting on Monday the “unexpectedly good first quarter 3.2% GDP” that he attributed to the China tariffs. 

“Some people just don’t get it!” he added.

Trump also asserted that Beijing was aware of the strong negotiating position he said the U.S. is in, arguing that the threat of moving manufacturing out of the country is “why China wants to make a deal so badly!” 

“There will be nobody left in China to do business with. Very bad for China, very good for USA!” he said.