Trump Hints at Potential Tariffs Reprieve with China After Mexico and Canada Deals
Washington, DC - February 14, 2023: US President Donald Trump has announced plans for discussions with China, suggesting a potential delay in the implementation of 10% tariffs scheduled to take effect within hours. This news comes after similar agreements with Mexico and Canada, indicating a shift in strategy regarding trade negotiations.
President Trump stated that talks with China would take place within the next day. The impending tariffs were originally set to go into effect at 12:01 AM on Tuesday. Trump warned that if a deal with China is not reached, "the tariffs will be very, very substantial."
The Hang Seng China Enterprises Index, which tracks Chinese stocks traded in Hong Kong, saw a significant rise of up to 3.6% on Tuesday. The offshore yuan also rallied, gaining nearly 1% against the US dollar. Chinese markets are expected to reopen on Wednesday following the Lunar New Year holiday.
White House Press Secretary Karoline Leavitt later revealed that Trump plans to discuss "illegal Chinese fentanyl that is killing tens of thousands of Americans every year" with Chinese President Xi Jinping. The focus on fentanyl reflects the Trump administration's ongoing concerns about the opioid crisis in the US.
Following last-minute agreements with Mexico and Canada to delay 25% tariffs, attention has now turned to China, the world's second largest economy. Beijing is expected to prioritize the issue of TikTok ownership in any discussions with Trump.
The reaction from China to Trump's initial tariff announcement has been relatively muted. The Commerce Ministry expressed "dissatisfaction" and hinted at unspecified "corresponding countermeasures," while also indicating that China would file a complaint with the World Trade Organization.
However, analysts note that China's economy is currently weaker and exports to the US have decreased, potentially influencing their response strategy. Trump's request for China to utilize its surveillance network to combat illicit drug trafficking adds another element to the negotiations, potentially complicating Xi's ability to avoid the tariffs.
Trump and Xi last spoke before the US president's second inauguration, discussing trade, fentanyl, and TikTok. The previous conversation was described as "very good" by Trump, but he subsequently proceeded with tariffs against China.