Trump threatens to raise China tariffs before talks this week

President Donald Trump intensified pressure on China to strike a trade deal in Washington this week by threatening to more than double tariffs on $200bn of the Asian nation’s sales to the world’s largest economy.

In an abrupt shift from the White House after both sides had indicated negotiations were going well, Trump tweeted on Sunday he’s not satisfied with the pace of progress and that the duties would increase Friday. He had twice delayed increasing tariffs to 25% from 10% after agreeing to a December 1 truce with President Xi Jinping to give their negotiators time to work out a comprehensive agreement.

“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate,” Trump said in his tweet. “No!”

Trump’s tweet was an about-face from his recent comments that talks were progressing, with people familiar with the negotiations saying that the administration expected to announce a deal on Friday, following another round of talks this week in Washington.

Two days ago, White House economic adviser Kevin Hassett said the Trump administration is “heartened” to see progress in trade talks with China though some issues still need to be resolved. Trump later told reporters that “the deal itself is going along pretty well. I would even say very well,” adding that a deal with Beijing could be weeks away.

Concluding a deal will hinge on the world’s two largest economies resolving the stickiest issues in their trade dispute. Some of the main issues remaining include an enforcement mechanism to police the agreement and a decision over whether tariffs will be removed or stay in place, according to the people, who spoke on the condition of anonymity.

In recent days, US officials grew frustrated with some of China’s backpedaling on some of their earlier commitments, including on the crucial matter of technology transfer, two people familiar with the situation said. That’s emboldened trade hawks within the Trump administration to push for a harder line, including the raising of tariffs, the people said.

Chinese President Xi Jinping’s top trade envoy, Liu He, returns to Washington on Wednesday for what was expected to be a closing round of trade talks. Trump’s acting chief of staff Mick Mulvaney and Treasury Secretary Steven Mnuchin last week began publicly ramping up pressure on China to reach a deal, warning it could still walk away from the months-long negotiations.

Trump and the Chinese president will decide after the negotiations this week whether they’ll meet to sign off on a pact, White House spokeswoman Sarah Huckabee Sanders said Thursday, adding that the US sees such a meeting as likely.

Trump imposed duties of 25% on an initial $50bn of Chinese goods last year and then 10% on an additional $200bn in products in September. Those duties were set to rise to 25% on January 1 and then again on March 1, but Trump delayed that as talks continued. China has imposed tariffs on $110 billion of US exports in retaliation.

Based on calculations by Bloomberg Economics, tariffs at the current level add up to a 0.5 percentage-point drag on China’s gross domestic product growth this year. An increase to 25% tariffs on $200bn in Chinese exports from 10% would raise the drag to 0.9 percentage point. Tariffs on all of China’s exports to the US would increase the burden to 1.5 point.