So much for the optimism that followed the WSJ report that the Trump administration is willing to offer China an olive branch in trade talks in hopes of avoiding further escalation (and which pushed the S&P back over 2,900).
Moments ago Bloomberg reported that President Trump has instructed aides on Thursday to proceed with tariffs on about $200 billion more in Chinese products despite Steven Mnuchin’s attempt to restart talks with Beijing to resolve the trade war.
The announcement of the new round of tariffs – which had been anticipated by most as a late September event – had been delayed as the administration considers revisions based on concerns raised in public comments, Bloomberg sources said.
On Thursday Trump met with his top trade advisers to discuss the China tariffs, including Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer. And as we said on Wednesday, Mnuchin has been the leading voice in the recent overture to the Chinese to re-start trade talks.
As a reminder, before his Thursday meeting, Trump boasted on Twitter that he has the upper hand in the trade feud with Beijing and feels “no pressure” to resolve the dispute.
The Wall Street Journal has it wrong, we are under no pressure to make a deal with China, they are under pressure to make a deal with us. Our markets are surging, theirs are collapsing. We will soon be taking in Billions in Tariffs & making products at home. If we meet, we meet?
— Donald J. Trump (@realDonaldTrump) September 13, 2018
His comment tempered cautious optimism among investors over the U.S. government’s proposal for another round of talks with Beijing. Disclosure on Wednesday that the U.S. sought to renew the talks rallied U.S. stocks and emerging-market assets. Meanwhile, with regard to Trump’s threat of $267 billion in additional Chinese tariffs, Bloomberg notes that the administration hasn’t yet published a list for public comment.
Efforts to end the dispute have fizzled so far, and for one simple reason: Trump is convinced that he is winning the trade war. Officials from both countries have met four times for formal talks, most recently in August, when Treasury’s undersecretary for international affairs, David Malpass, led discussions in Washington with Chinese Vice Minister Wang Shouwen.
In kneejerk reaction to the news, US stocks, and the Chinese yuan tumbled having priced in a far more favorable outcome in recent days.
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