Trump says he will not cease Chinese tariffs to start talks

When Trump announced his tariffs, I stated from the outset that China was the only country that really mattered.

Reports are now surfacing that China is in trouble, and Trump is apparently taking that cue to refuse to remove the tariffs just to get China to come to the table.

Surge in protests

In order for this to work, Trump needs China to cave, but China has the leverage against us, not the other way around. Having said that, even that leverage comes with a ticking clock when you realize how much China depends on the American consumer dollar to drive its economy.

That leverage appears to be disappearing, as reports surfaced in recent days about large-scale protests in China by workers who have not been paid in weeks.

Factories are shutting down, and China’s exports are being reduced to the point that China’s economy is taking a massive hit.

Goldman Sachs estimated that roughly 16 million jobs could be lost over this tariff war, which will slowly start to apply pressure to President Xi to end the tariff war with the United States.

China starting to thaw

China has started to hint that it is ready to come to the table to discuss a trade deal with Trump, but the communist nation has not yet completely broken.

China’s Commerce Ministry stated, “The U.S. has recently sent messages to China through relevant parties, hoping to start talks with China. China is currently evaluating this.”

John Gong, a former consultant to China’s Commerce Ministry, offered his two cents, stating, “They are preparing for the negotiation, who’s going to lead the negotiation, what would be the strategy, what is the model like to deal with Washington. All these things are currently probably being intensively debated and discussed right now.”

My guess here is that both nations are going to look to save face, so how do they do that without upsetting the other side?

Not giving in

In the past, Trump has paused tariffs against nations that stated they wanted to make a deal, but Trump is playing hardball with China, probably thinking he may now have the upper hand in this deal.

Trump was asked about pausing the tariffs to get China to the table, and he was quick to respond, “No.” Trump also stated, "They said today they want to talk. Look, China, and I don't like this. I'm not happy about this. China's getting killed right now."

"They're getting absolutely destroyed," he continued. Their factories are closing. Their unemployment is going through the roof. I'm not looking to do that to China now. At the same time, I'm not looking to have China make hundreds of billions of dollars and build more ships and more Army tanks and more airplanes."

Trump did state that at some point, he would consider lowering the tariffs, but that is not happening, and he clearly will not remove them. If I were advising Trump, I would tell him to make an offer to lower them slightly now if China met by a specific date, then work toward a deal that both countries can live with. Neither Trump nor President Xi wants to be upstaged here, and the diplomatic thing to do would be to extend the olive branch to get the talks started. This needs to be settled soon because right now, both countries are paying the price, and neither can afford to have this go on much longer.