Trade War Update: More Tariffs Go Up

By Matthew McMullan
May 14 2019 |
President Trump’s trade fight with the Chinese government is amping up. | Photo by Gage Skidmore

And China’s state media is now weighing in.

These days there’s enough happening on the Trump administration’s trade agenda that it warrants a weekly update. It’s Tuesday! And we’re gonna talk about trade!

It’s Trade Tuesday!

Last week President Trump, on the advice of his trade negotiator, further raised tariffs on Chinese imports after Chinese negotiators made sweeping revisions to agreements the U.S. side believed were settled.

Those Chinese negotiators still arrived in Washington for talks a few days later, apparently just to keep the talks going. The U.S. tariffs went up while they were still in town, and China has since retaliated with more tariffs against American imports of its own – and its state-run media outlets, which have until now been relatively quiet on the topic of the American trade dispute, are now getting involved. This editorial was featured in the Xinhua News Agency and the People’s Daily:

“The most important thing is that in the Sino-U.S. trade war, the American side fights because of greed and arrogance. If it does not brag and make up stories, the country’s morale will break. China is fighting back to protect its legitimate rights and interests.”

“… The trade war in the United States is the creation of one person and his administration who have swept along the entire population of the country. Whereas, the entire country and all the people of China are being threatened. For us, this is a real ‘people's war.’”

Yikes! President Trump, meanwhile, seems quite sanguine about all of this – or he’s worried about the economic fallout from a prolonged period with tariffs raised. I guess it depends on where you sit! At any rate, he managed to mix a tweet about steel tariffs in there with a lengthy Twitter harangue about China:

But the Trump administration’s steel tariffs, you’ll remember, are in response to a depressed global steel market caused by massive, state-led manufacturing overcapacity in China – and they aren’t in the same bucket as the U.S.-China tariffs. The steel tariffs were raised in March 2018 against nearly all steel imports, and have helped create market conditions that have led to significant capital investments by the American steel industry.

They are, however, sticking in the craw of a lot of Congressional Republicans that don’t like tariffs on principle. And the removal of those tariffs on Canadian and Mexican steel imports is becoming an impediment in gaining Congressional approval for the Trump administration’s renegotiated NAFTA agreement – the U.S.-Mexico-Canada Agreement (USMCA).

Mexico and Canada, as you would imagine, very much want the steel tariffs lifted. Word is their negotiations with the Trump administration may shortly bear some fruit, according to Sen. Chuck Grassley (R-Iowa). And Canadian diplomats are coming down to talk trade in Washington on Wednesday. Politico reports:

“The Trump administration has met with Canadian and Mexican officials on and off for almost a year in an effort to remove the tariffs and replace them with quotas. However, both countries have pushed back against the Trump administration's insistence on quotas, and it remains unclear what a deal to lift the tariffs would look like for the North American trading partners.

“Removing the duties, which Trump imposed on national security grounds, would clear a major hurdle in the effort to ratify the U.S.-Mexico-Canada Agreement in all three countries. Grassley has repeatedly called for the Trump administration to lift the tariffs, going so far as to say the USMCA is dead if the duties are not removed.”

Suffice it to say: There’s a lot going on. We’ll check back in on the next Trade Tuesday, if not sooner!