U.S. President Donald Trump said on Tuesday that he is not in a rush to speak with Chinese President Xi Jinping to address the new trade conflict between the two largest global economies, which was sparked by his sweeping 10% tariffs on all Chinese imports.
In response, China imposed targeted tariffs on U.S. imports on Tuesday and warned several companies, including Google, about potential sanctions.
“That’s fine,” Trump said at the White House when asked about China’s retaliatory duties.
A conversation between Xi and Trump is seen as crucial for potentially easing or delaying tariffs, as seen in talks with leaders from Mexico and Canada earlier this week.
White House spokesperson Karoline Leavitt told reporters that a call between Trump and Xi was yet to be scheduled.
“President Xi did reach out to President Trump to speak about this, maybe to begin a negotiation. So we’ll see how that call goes,” Leavitt said on Fox Business Network earlier on Tuesday.
Beijing’s measured response to Trump’s 10% tariffs on all Chinese imports underscored their attempt to engage Trump in talks to prevent an all-out trade war between the two largest economies.
Liu Pengyu, spokesperson for the Chinese embassy in Washington, expressed China’s hope that the U.S. would work with Beijing to ensure stable and sustainable relations between the two nations.
The International Monetary Fund, which had previously warned that protectionist policies could disrupt investments and supply chains, stated it was in everyone’s best interest to find constructive ways to resolve disagreements and facilitate trade.
Capital Economics, a UK-based research firm, estimated that China’s additional tariffs would apply to about $20 billion in U.S. imports, compared to the $450 billion worth of Chinese goods now subject to the Trump tariff.
“The measures are fairly modest, at least relative to U.S. moves, and have been calibrated to send a message to the U.S.,” said Julian Evans-Pritchard, head of China Economics at Capital Economics.
Trump had recently paused his threat of 25% tariffs on Mexico and Canada in exchange for concessions on border and crime enforcement.
EUROPE NEXT?
Trump hinted on Sunday that the European Union would be his next target for tariffs but did not specify when.
Ursula von der Leyen, the head of the European Commission, stated that Brussels is ready for tough negotiations but stressed the importance of fostering a stronger partnership with the EU’s largest trade and investment partner.
The European Commission and the new U.S. administration have been in technical contact, though von der Leyen and Trump have yet to speak directly, a Commission spokesperson confirmed.
China’s new measures, implemented as Trump’s tariffs took effect, include a 15% levy on U.S. coal and LNG and 10% on crude oil, farm equipment, a small number of trucks, and luxury sedans exported from the U.S. to China.
China also initiated an anti-monopoly investigation into Alphabet’s Google and placed PVH Corp, the holding company for brands like Calvin Klein, and U.S. biotech firm Illumina, under potential sanctions.
PVH expressed surprise and disappointment over China’s actions, asserting that it complies with all relevant laws, while Illumina reiterated its commitment to abiding by regulations wherever it operates.
Google declined to comment on the investigation.
EXPORT CONTROLS ON SOME METALS
China also announced export controls on key metals such as tungsten, which are crucial for electronics, military equipment, and solar panels.
The 10% duty on electric trucks from the U.S. could impact Elon Musk’s Tesla, specifically the Cybertruck model. Tesla had no immediate comment on the matter.
China’s tariffs won’t take effect until Monday, providing time for Washington and Beijing to seek a deal, which Chinese policymakers have indicated they hope to reach with Trump as China’s domestic demand slows.
During his first presidential term, Trump initiated a two-year trade war with China over its trade surplus with the U.S., leading to tit-for-tat tariffs that disrupted global supply chains and impacted the global economy.
“The trade war is in its early stages, so the likelihood of further tariffs is high,” said Oxford Economics, which downgraded its China growth forecast.
Trump also mentioned that he might increase tariffs on China unless Beijing takes action to stop the flow of fentanyl, a deadly opioid, into the U.S.
China maintains that fentanyl is a U.S. problem and stated it would challenge the tariffs at the World Trade Organization and consider other countermeasures, while leaving the door open for talks.
The U.S. represents a small source of crude oil for China, accounting for just 1.7% of its imports in 2023, worth about $6 billion. Around 5% of China’s LNG imports come from the U.S.
“Even if the two countries can reach agreements on some issues, tariffs could continue to be a recurrent tool, potentially creating market volatility throughout this year,” said Gary Ng, senior economist at Natixis in Hong Kong.
In Ottawa and Mexico City, there was relief after Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum agreed to bolster border enforcement, leading to a 30-day pause in the planned 25% U.S. tariffs.
EU trade chief Maros Sefcovic expressed a desire for early talks with the U.S. to avoid potential tariffs, stating, “We believe through constructive engagement and discussion we can resolve this problem.”
