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Sunday, December 15, 2019

Trump renews tariff threat against China and touts US economic ‘boom’

Trump used the speech to claim credit for an economic “boom” while downplaying any negative effect on the U.S. economy from the tariffs that both sides have placed on each other’s goods.

By: New York Times | Washington | Published: November 13, 2019 9:17:00 am
Trump renews tariff threat against China and touts US economic ‘boom’ President Donald Trump speaks at the Economic Club of New York on Tuesday. (Anna Moneymaker/The New York Times)

Written by Ana Swanson, Maggie Haberman and Jeanna Smialek

President Donald Trump said Tuesday that the United States was “close” to an interim deal with China and that an agreement “could happen soon,” even as he renewed his threat of additional tariffs.

Trump’s remarks at the Economic Club of New York were likely to stoke still more uncertainty about how quickly the 19-month trade war will be resolved. He used the speech to claim credit for an economic “boom” while downplaying any negative effect on the U.S. economy from the tariffs that both sides have placed on each other’s goods.

If Beijing doesn’t accede to America’s trade terms, he said, “we’re going to substantially raise those tariffs.”

“We will only accept a deal if it’s good for the United States,” he added.

Washington and Beijing are trying to reach a Phase 1 trade agreement that would resolve some of the administration’s concerns about China’s economic practices and help defuse tensions that have slowed the global economy.

But Trump’s comments provided little clarity about whether the two sides were any closer to a deal. Since he announced Oct. 11 that the United States had reached a preliminary agreement with the Chinese, the administration has vacillated between optimistic and pessimistic statements, and the countries now appear farther from signing an agreement than he initially suggested.

Trump spent portions of the speech defending his tariffs to a group that has been among the most skeptical of the import taxes — New York business leaders. The president defended his approach, accusing China of cheating the United States for years and unfairly targeting American farmers with its tariffs.

He denied that his trade policy had created uncertainty for the economy, adding that the real cost “would be if we did nothing.”

The Trump administration has sent mixed signals about whether it would agree to roll back any of its existing tariffs on China as part of an initial agreement. Beijing has said easing tariffs is essential to any agreement, and administration officials said last week they expected tariff relief as part of Phase 1. But other administration officials have disputed those statements, and Trump has further confused things by saying the United States has not agreed to anything — yet.

In an interview later Tuesday, Larry Kudlow, director of the National Economic Council, said that it was “possible” that tariffs could be adjusted as part of the deal but that neither side would agree to any tariff adjustments until the entire deal was finalized.

“Since there’s no formal agreement we can’t say,” he said.

Kudlow added that China and the United States had made progress on strengthening China’s protections on intellectual property and its valuation of its currency, but that some other issues might slip into a second-phase agreement.

In a speech that was heavy on politics, Trump credited a program of tax cuts, deregulation and tough trade policy for creating 7 million new jobs so far in his term and encouraging companies to set up shop in the United States. If Republicans took back the House and retained control of the Senate and the White House in 2020, America’s prosperity would continue, the president said.

He predicted the business crowd would vote for him next November.

“The truth is look, you have no choice, because the people we are running against are crazy,” he said to laughter. “OK? They are crazy.”

Speaking to an audience in Manhattan that included his son-in-law Jared Kushner and Kudlow, Trump said he had delivered on his promises to reverse what he described as a decline in U.S. industry.

“We have ended the war on American workers, we have stopped the assault on American industry, and we have launched an economic boom the likes of which we have never seen before,” Trump said, to the sound of forks clinking on plates.

Trump castigated the Democrats’ “outrageous hoaxes and delusional witch hunts” and talked about the importance of the rule of law, the day before the first public hearings of an impeachment inquiry that threatens his presidency.

“We must protect the constitutional rule of law in our country at all cost,” Trump said to applause. He boasted of his record of appointing more than 160 federal judges, with another 30 or so expected to clear the Senate in the next two months.

At other points, Trump criticized President Barack Obama, and he repeatedly overstated his own economic record.

Trump has presided over a strong labor market, where unemployment has fallen to a half-century low. The share of people working or looking for work has increased, and wages are growing — although not as quickly as they did before the 2007 to 2009 recession.

Job growth has slowed somewhat recently, but that is in line with economists’ expectations, given that the United States’ economic expansion is in a record-breaking 11th year. Job growth averaged about 217,000 per month during Obama’s second term and has averaged about 189,000 in Trump’s tenure through October.

Yet sectors of the economy, particularly manufacturing, have fallen short of the strong performance that Trump spoke of Tuesday.

“Factories and businesses will always find a home,” the president said. “It is up to us to decide whether that home will be in a foreign country, or right here in our country, our beloved USA, and that’s where we want them to stay and be and move to.”

Manufacturing has slowed sharply this year, with factory activity contracting in August, September and October, according to data from the Institute for Supply Management.

Businesses have been slow to buy equipment despite Trump’s corporate tax cuts, which provided favorable tax treatment for new purchases. Many businesses anecdotally cite uncertainty related to the administration’s drawn-out trade wars as a cause for their hesitancy. Productivity, which looked to trending upward, posted a decline in the third quarter, data showed last week.

Against that backdrop, and as fiscal stimulus from tax cuts and higher spending caps fades, economists are projecting slower growth ahead. Economists in the Blue Chip Economic Indicators survey expect 1.8% growth in 2020, down from a 2.3% projection in 2019.

In his speech, Trump blamed any economic woes on the Federal Reserve, berating central bank officials for keeping interest rates too high and putting the United States at a competitive disadvantage to other countries.

After quoting stock gains, he said that “you could have added another 25%” to the stock market’s climb if the Fed had “worked with us.”

“But we all make mistakes, don’t we?” he asked.

Trump made no specific mention of a Wednesday deadline to decide whether to impose tariffs on automobiles and auto parts that has particularly hung over trade with Europe. Advisers have said the tariffs appear unlikely, but Trump will make the ultimate decision.

But the president repeated the accusation that the European Union had imposed “terrible” trade barriers on the United States that were “in many ways worse than China.” And he warned that he would impose tariffs on nations that “mistreat” the United States.

The speech sought to burnish his economic record, but the president often strayed into political territory, hitting “far-left” politicians in Washington, who he said are trying to control the economy from the “top down.” That is part of his refrain against the entire Democratic Party with his general election opponent yet to be determined.

Trump’s preoccupation with popularity — and comparing himself with Obama — was also on display. At one point he said he had recently seen a poll that Obama is more popular than Trump is in Germany.

“I said, guess what? He should be,” Trump said. “The day I’m more popular than him, you know I’m not doing my job.”

At another point, Trump suggested that every foreign leader he meets with in Washington praises the United States and said he has an open-door policy to talk to any official who wants to visit the White House.

“Anybody that wants to come in,” he said, “dictators, it’s OK.”

He will host Turkey’s leader, Recep Tayyip Erdogan, at the White House on Wednesday.

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