Trump Appears Confident That His Tariff Tactics Will Work With China
NOEL KING, HOST:
Yesterday, President Trump pulled a piece of paper out of his jacket pocket and held it up for reporters at the White House.
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PRESIDENT DONALD TRUMP: This is one page of a very long and very good agreement for both Mexico and the United States. Without the tariffs, we would have had nothing. We had nothing two weeks ago.
KING: President Trump seems to have concluded that if the threat of tariffs worked with Mexico, it will also work with China. Here he is on CNBC.
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TRUMP: The China deal is going to work out. You know why? Because of tariffs. Because right now China is getting absolutely decimated by companies that are leaving China, going to other countries, including our own.
KING: So to clarify, Trump is threatening more tariffs against China if President Xi Jinping doesn't meet with him in Japan at the G20 summit. Is this a wise move? Amy Celico was senior director for China at the U.S. Office of the Trade Representative. Amy, thanks for coming in.
AMY CELICO: Great to be here.
KING: I am curious about why President Trump made this threat in the first place. Was there any information that President Xi planned to avoid meeting with President Trump at the G20?
CELICO: The Chinese have not confirmed that President Xi is going or is not going. And so President Trump continuing to threaten something against China if President Xi doesn't attend seems to be, just on the U.S. side, trying to ratchet up pressure. The Chinese side, even yesterday, again said there is no confirmation that a meeting on the sidelines of the G20 will or will not take place with President Trump. However, China has not at all indicated President Xi will skip the G20 this year.
KING: Interesting. So we still don't know. President Trump seems pretty confident that this threat to raise tariffs will get him what he wants from China, and he's citing Mexico and that recent agreement. Does he have a point?
CELICO: He certainly does have some leverage in his pocket now. And the Chinese, of course, are watching this very, very closely to see exactly how that agreement came to be. On the U.S. side, of course, we have not had formal talks with the Chinese for almost a month now, except Secretary Mnuchin seeing the head of the People's Bank of China at the G20 Finance Ministers Meeting last weekend, where they had, quote-unquote, "constructive" talks. But from the U.S. side, there's been no progress since the talks broke down.
And so setting up for a meeting between President Trump and President Xi at the G20 to actually press a reset button on the trade talks is very difficult because no groundwork has been laid, even more difficult for the Chinese side. They like advance preparation. They don't want their president to be vulnerable, if he goes to see President Trump at the G20, without an advanced set of agreed negotiating tactics and outcomes. It looks like the case of Mexico is demonstrating to the Chinese side President Trump really does have leverage here.
KING: So does power - does China hold any power in this situation? If they do, what is it?
CELICO: Of course. China, in the past few weeks, has been stepping up rhetoric about the leverage that it has. For example, they just reiterated that their economic data over the past month was quite good. And so exports are up, even though the U.S.-China trade tensions certainly are going to be a factor on a U.S. - excuse me - a slowing Chinese economy.
The Chinese have said they have tools that will decrease that pressure on their economy. They can increase government bonds to stimulate the domestic economy. They can import products from other markets - Russia being one of them, where they specifically said they will increase purchases of soybeans and other products. And so the Chinese government is saying, we can afford to wait out this trade war. Of course, there are consequences for both countries, but that is not going to make us buckle.
KING: President Trump has clearly decided that tariffs are a good use, a good tool of foreign policy, in a way that is unlike any of his predecessors. What's the longer-term implication of this?
CELICO: Well, for the Chinese side, clearly, one of the longer-term implications is, if President Trump is crowing that he made such a great deal with Mexico but already saying that, if Mexico doesn't do X, Y, Z, the U.S. will return to using tariffs and other unilateral measures to punish the Mexican government, probably does empower the more conservative voices in China, saying, don't make a deal with the United States because they're not a reliable negotiating partner right now. And so a deal won't negate the possibility that the U.S. will increase pressure down the road.
KING: So some concern that President Trump's strategy may, in fact, undermine him. You've negotiated trade deals with China before. In your experience - and briefly - what does work?
CELICO: Well, certainly, both sides, if they're not negotiating in public, have a lot more space to talk about what they could do, what they can't do. But the fact that this is such a public discussion - President Trump being negotiator in chief here - is very different from prior negotiations. And it actually makes it harder for us to make a deal with the Chinese that then can be announced, where both sides can say, we got something out of this. That's clearly what both sides still want. But on the Chinese side, they're waiting to see what is it we're going to get.
KING: Amy Celico, former China trade negotiator.
CELICO: Thank you.
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