President Donald Trump expanded his tariff threats to include China and the European Union on his second day back in office after a first day that saw Canada and Mexico in his sights.
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(Bloomberg) — President Donald Trump expanded his tariff threats to include China and the European Union on his second day in office, one day after seeing Canada and Mexico in his sights.
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“We’re talking about a 10% tariff on China, based on the fact that they export fentanyl to Mexico and Canada,” Trump said during a White House event on Tuesday, specifying February 1 as a possible date. .
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“Other countries are big bullies and, you know, it’s not just China,” Trump said. “We have a $350 billion deficit with the European Union. They treat us very badly, so they will be taxed.”
The threats echo comments he has made throughout Trump’s campaign to return to the White House and since his victory on November 5. But the only real action taken so far is a call for a review of trade procedures due April 1, which would likely give China and others about 10 weeks to avoid new taxes or to meet his needs.
The Chinese government has reiterated its opposition to the tariffs, and Foreign Ministry spokesman Mao Ning said on Wednesday that there are no winners in the trade war, adding that China will protect its national interests.
What Trump’s New Tariff Push Means for the Economy: QuickTake
Earlier on Tuesday, Chinese Vice Premier Ding Xuexiang said China would increase its imports, saying the country did not want “more trade money.” Bloomberg News reported that people familiar with Trump’s discussions surrounding China said he was interested in opening talks with China.
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On Monday, the first day of his new term, Trump stopped short of ordering tariffs on China, just as he said he intended to hit Canada and Mexico – the US’s closest neighbors – with tariffs of 25% on February 1. That fueled gains in Asian stocks. on Tuesday.
Market Dynamics
Chinese shares fell on Wednesday after Trump’s latest comments, with the benchmark CSI 300 Index headed for its first decline in five days and the Hang Seng China Enterprises Index the worst performer in Asia.
While the 10% rate is lower than the 60% tariffs on Chinese goods that Trump floated during his election campaign, investors are looking for more volatility.
“It’s going to be tough from here,” said Xin-Yao Ng, director of investments at abrdn Plc in Singapore. “It’s a reminder that Trump is going to do something, because the first day might have given the false impression that he might not.” Progressive taxes may delay or reduce the stimulus the market needs.”
Trump on Tuesday reiterated his earlier threat to hit Canada and Mexico with tariffs, insisting that this was not an attempt to force a renegotiation of the trilateral free trade agreement, but because they had allowed illegal immigrants and drugs to enter. in the US.
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It is not clear what legal authority Trump would have to order these charges. In an executive session on Monday, he told officials to “check the illegal migration and flow of fentanyl” from Canada, Mexico and China and report back by April 1.
Before his inauguration, there were reports that he was considering declaring a national economic emergency in order to impose new tariffs, but this move has not yet been announced.
“While the Trump administration’s immediate actions do not lead to immediate new tariffs, the memorandum shows a clear and methodical effort to lay the foundations for future tariffs and other measures,” according to a senior order report by law firm Baker. McKenzie.
Earlier: Xi Dodges Trump’s Previous Costs, Buying Time for China to Influence US
Trump took aim at China in his first term on trade, setting off a confrontation that reshaped supply chains and the global economy. Trump spoke with his Chinese counterpart Xi Jinping days before the second inauguration, in a phone call where they discussed trade, fentanyl and social media app ByteDance Ltd.
“We haven’t talked much about tariffs, except you know where I stand,” Trump said Tuesday, defending his approach on the issue.
“Look, I have invested huge amounts in China. I took hundreds of billions of dollars. Until I became president, China had never paid ten cents to the United States,” he said.
—With help from James Mayger, Zhu Lin, Meghashyam Mali, John Harney and Lucille Liu.
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