Trump puts farmers, consumers, growth and perhaps 2020 on the line in trade war with China | China retaliates

In this March 5, 2019, file photo, cargo containers are staged near cranes at the Port of Tacoma, in Tacoma, Wash. China has announced tariff hikes on $60 billion of U.S. goods in retaliation for President Donald Trump’s escalation of a fight over technology and other trade disputes. The Finance Ministry said Monday, May 13, the penalty duties of 5% to 25% on hundreds of U.S. products including batteries, spinach and coffee take effect June 1. (AP Photo/Ted S. Warren, File)

The two largest world economies escalated a trade war on Monday that threatens the livelihoods of some U.S. farmers, will raise prices for American consumers and could slow U.S. economic growth.

If wielding tariffs as weaponry continues into 2020, President Trump will be pressed to explain the wisdom of his trade strategy in red states he needs to win if he wants a second term.

“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. Too expensive to buy in China. You had a great deal, almost completed, & you back out!” he tweeted.

Hours after Trump warned China on Monday not to retaliate against his decision to levy 25 percent tariffs on $200 billion in Chinese imported goods, Beijing did just that. China announced steep tariffs on $60 billion in U.S. goods beginning on June 1, prompting a stock market slide (The Associated Press).

The president said he’ll meet with Chinese President Xi Jinping and other heads of state in Osaka, Japan, at the G-20 summit next month, where Trump hopes he can revive trade talks, which fell apart when he accused China of backtracking and then hiked tariffs on Friday.

Trump insists a continuing tit-for-tat battle, which has not yet affected automobiles in either country, is more painful for Beijing than for the United States.

The president, who just days ago spoke optimistically about concluding a significant trade deal with China this spring, instead adopted a combative stance while threatening to apply levies to all $540 billion in Chinese imports, which would be a blow to U.S. consumers and businesses of all kinds.

“There will be price hikes at Target, Costco, Home Depot and Walmart,” Nelson Dong, a partner with Dorsey & Whitney in Seattle, told The Washington Post. “The importers are going to pass on some or all of the tariff to the consumer and that will become much more readily apparent and harder to mask.”

The Office of the United States Trade Representative released a list on Monday of the roughly $300 billion worth of products that could yet face up to a 25 percent tariff and requested public comment, which will begin the formal process for enacting those duties. The list includes almost every consumer product, from coffee makers to sneakers to telescopic sights for rifles (The New York Times).

A sign of the president’s concern, however, emerged with his sudden, new assurances to U.S. farmers on Monday that the administration will make another $15 billion in taxpayer-backed subsidies available to offset revenue losses as U.S. sales to China of soybeans, wheat and other agricultural products evaporated. An earlier round of subsidies totaled $12 billion.

“The retaliatory tariffs will have a significant consequence to Kansans in agriculture, in particular, but manufacturing as well,” said Sen. Jerry Moran (R-Kan.). “Commodity prices are low, the weather’s not been our friend, and times are really tough in agriculture, so this is a development that will be very hard for some farmers to survive unless this gets resolved quickly.”

Lawmakers in Washington said in interviews that the ongoing trade battle with China needs to succeed — and soon.

Sen. John Cornyn (R-Texas), who is running for reelection next year, said he backs the president’s China strategy as long as it ends quickly and well.

“I think tariffs are a useful negotiating tool, but there are consequences, as we see in the stock market. Obviously, Americans end up paying increased cost,” Cornyn said Monday.

The Associated Press: U.S. farmers who sell to China feel the pain of the trade tariffs.

The New York Times: Investor reaction — what if the trade war continues indefinitely?

The Hill: Republican lawmakers are nervous that trade battles will cost them seats next year in rural America.

The Hill: Trump’s repeated assertion that China will pay for tariffs imposed by the United States is incorrect.

NBC News: Trump’s China gamble.

CNBC: Trump’s overall trade and tariffs policies reduced U.S. income by $6.9 billion over 11 months last year, according to new research by the Federal Reserve Bank of New York, Princeton University and Columbia University

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