The failure of the United States and China to reach agreement raises the risk of permanent tariffs.
By David J. Lynch and David J. Lynch Financial writer covering trade and globalization Email Bio Follow Heather Long Heather Long Economics correspondent Email Bio Follow May 10 at 7:42 PM The failure of the United States and China to reach agreement Friday on a comprehensive trade deal raises the risk that President Trump’s favorite negotiating tool — high tariffs on imported goods — may be hardening into a permanent feature of the U.S. economy.
“The relationship between President Xi and myself remains a very strong one, and conversations . . . into the future will continue. In the meantime, the United States has imposed Tariffs on China, which may or may not be removed depending on what happens with respect to future negotiations!” the president tweeted.
Opposition has been especially pronounced among senators representing farm states that have been hurt by Mexico’s retaliatory tariffs on U.S. agricultural products. The president’s claim that the tariff bill is paid by countries on whose products levies are imposed has been criticized by economists associated with both parties. Several studies have shown that the financial impact of the U.S. tariffs imposed over the past year has fallen almost entirely on American consumers and businesses.
Trump’s muscular approach cheered his protectionist supporters. “While Pres. #Trump placed tariffs on China, r econ has boomed: 3.6% unemployment rate, 3.2% inc in avg hourly earnings, & GDP +3.2%,” tweeted Dan DiMicco, a former chief executive of the steel company Nucor. “The latest escalation in trade negotiations with China threatens to exacerbate the slowdown. Threats have been made, and if tariffs are increased it will kick a sector that is already on the decline,” Bank of America Merrill Lynch economists wrote in a research note Friday.
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