Trump Warns Xi: Trade War With China Begins Monday

Tyler Durden's picture

As if there weren't enough geopolitical and social stress points in the world to fill a lifetime of "sleepy, vacationy" Augusts, late on Friday night President Trump spoke to Chinese President Xi Jinping and told him that he's preparing to order an investigation into Chinese trade practices next week, according to NBC. Politico confirms that Trump is ready to launch a new trade crackdown on China next week, citing an administration official, a step that Trump delayed two weeks ago under the guidance of his new Chief of Staff Gen. Kelly, but now appears imminent. It is also an escalation which most analysts agree will launch a trade war between Washington and Beijing.

As Politico details, Trump on Monday will call for an investigation into China over allegations that the nation violated U.S. intellectual property rights and forced technology transfers, the official said. While it's unclear how much detail Trump will get into in the announcement, administration officials expect U.S. Trade Representative Robert Lighthizer to open an investigation against China under Section 301 of the Trade Act of 1974. The ordering of the investigation will not immediately impose sanctions but could lead to steep tariffs on Chinese goods. Trump has expressed frustration in recent months over what he sees as China's unfair trade policies.

As we discussed two weeks ago, Trump had planned to launch the trade investigation more than a week ago, but he delayed the move in favor of securing China's support for expanded U.N. sanctions against North Korea, the senior administration official said.

The pending announcement also comes amid heightened tension between the United States and China, even after the Trump administration scored a victory in persuading Beijing to sign onto new United Nations sanctions on North Korea. Still, Trump has delayed trade action before, amid pressure from business groups and major trading partners:

Two Commerce Department reports examining whether to restrict steel and aluminum imports on national security grounds were expected by the end of June but have been bottled up in an internal review. Trading partners raised threats of retaliation and domestic steel users complained of being hurt by price increases and restricted supply.

The trade investigation will immediately strain relations between the U.S. and China as the two countries wrestle with the unpredictable situation over North Korea.  Should Trump follow through, the move will lay the groundwork for Trump to impose tariffs against Chinese imports, which will mark a significant escalation in his efforts to reshape the trade relationship between the world's two largest economies. In other words, even if there is now conventional war announced with either North Korea or Venezuela, Trump's next step is to launch a trade war against China.

"The United States government can, and does, work with countries to address serious concerns such as North Korea while also pursuing measures to address economic concerns, such as the theft of U.S. intellectual property," a U.S. National Security Council official said.

It wasn't immediately clear how China would react to the move.

When reports of the potential trade investigation first emerged more than a week ago, China's Commerce Ministry stressed the importance of U.S.-China trade ties and of resolving differences "through dialogue and consultation."


"We would like to emphasize that the Chinese government has always attached importance to intellectual property protection," a spokesman said. "The results are there for all to see."

Trump, who has been residing at his golf club in Bedminster, New Jersey, for the past week, plans to return to Washington on Monday to officially announce the trade investigation. The decision will not only take action against alleged Chinese violations of U.S. companies' intellectual property rights, but could also be perceived as an attempt by the U.S. government to crank up the pressure on Beijing to rein in North Korea. "I think China can do a lot more," Trump told reporters on Thursday. "And I think China will do a lot more."

As CNN adds, the trade investigation is expected to be only one part of a multi-pronged push by the Trump administration to counter perceived Chinese trade abuses.  The administration has been eyeing other moves to rebalance the U.S.-China trading relationship. But analysts have cautioned that Trump faces a huge challenge in his desire to significantly reduce the U.S. trade deficit with China, which last year stood at more than $300 billion. "Protection measures against some specific items, such as steel and aluminum, may gain political favors, but are not likely to be of much help to rebalance trade," economists at the Institute of International Finance wrote in a research note this week.

* * *

Meanwhile, as we reported previously, China state media signaled the nation would hit back immediately against any trade measures, as it has done in past episodes. This time around, the need to project strength domestically is compounded by the looming twice-a-decade leadership reshuffle that may further entrench President Xi Jinping’s power.

Chinese officials have mulled stemming U.S. imports should retaliation be necessary. Under a draft plan, soybeans have been singled out as the top product that can be dialed back, according to people familiar with the matter. Autos, aircraft and rare-earth commodities have also been identified as potential categories for restriction, the people said.

Still, Trump's offensive comes at a very sensitive time for Beijing: just weeks ahead of the 19th Party Congress, when Xi Jinping wants everything in his economy to be perfect. "Ahead of the 19th Party Congress, the last thing that China will want is a trade war," said Callum Henderson, a managing director for Asia-Pacific at Eurasia Group in Singapore. "It is also important that Beijing does not look weak in this context. As such, expect a cautious, proportional response."

Of course, ultimately the big question - as Bloomberg puts it - is whether the Trump administration is willing to risk a trade war as it ups the ante. The IMF warned last month that “inward-looking” policies could derail a global recovery that has so far been resilient to raising tensions over trade. The problem, for both the US and China, is that as Trump gets increasingly more focused on distracting from his numerous domestic scandals, he is likely to take ever more drastic action in the foreign arena, whether that means "hot war" with North Korea, or trade war with China.

“So far, it’s all been posturing, with little action,”’ said Scott Kennedy, a U.S.-China expert at the Center for Strategic and International Studies in Washington. “Pressure is building to do something, so the U.S. doesn’t look like a complete paper tiger.”

And while we await the formal announcement on Monday and China's retaliation, below again is a breakdown of the biggest US state winners and losers if and when trade war with China breaks out, from "Winners And Losers When Trade War Breaks Out Between The US And China"

* * *

Who stands to lose - and win - if the U.S. takes aim at the unbalanced trade relationship with China? With total bilateral trade of more than half a trillion dollars a year, the list of potential losers is very long as Bloomberg analyzed recently. The most notable examples include:

  • U.S. companies such as Apple Inc., which assemble their products in China for sale in the U.S., and those tapping demand in China’s expanding consumer market.
  • U.S. agricultural and transport-equipment firms, which meet China’s demand for soy beans and aircraft.
  • Manufacturing firms from the U.S. that import intermediate products from China as an input into their production process.
  • Retailers including Wal-Mart Stores Inc. and the U.S. consumers that benefit from low-price imported consumer electronics, clothes and furniture.
  • Other trade partners caught in the crossfire of poorly-targeted tariffs. On steel, for example, U.S. direct imports from China account for less than 3% of the total -- below Vietnam.

And while conventional wisdom is that the US has a chronic trade deficit with China - it does - the U.S. also runs a nearly $17 billion trade surplus with China for agricultural products. China consumes about half of U.S. soybean exports, America’s second largest planted field crop. Soybean farms are mostly located in the the upper Midwest (Illinois, Iowa, Indiana, Minnesota and Nebraska). The volumes are so significant that a spike in soybean exports was a noticeable contributor to GDP growth in the second half of last year as readers may recall. China is also a major buyer of U.S. aircraft, perhaps the only areas of manufacturing where the U.S. retains a competitive edge (though not for much longer). The U.S. also has an $8 billion dollar trade surplus with China in the transportation equipment category.

U.S. Trade Balance With China by Product

How about geographically?

It may come as a surprise that on a state-by-state basis, eight U.S. states are running surpluses with China, six of which supported Trump in last year’s presidential election, including West Virginia. In 2016, Louisiana registered the largest surplus, at 2.9% of the state’s GDP. Louisiana’s exports to China are likely inflated given that 60% of U.S. soybean exports are shipped through the Gulf coast. Washington state was second at 1.6% of GDP, largely due to aerospace exports.

Tennessee maintains the largest trade deficit with China at 6.5% of GDP, meaning tariff-induced increases in the price of imports could have the biggest impact on this state.

The biggest losers? Mississippi, Georgia, Illinois and  California, all of which maintain deficits at more than 3% of GDP.

For the sake of brevity, we will not discuss another, more troubling, aspect of conventional wisdom, namely that trade wars almost inevitably lead to real wars. Aside for the US military industrial complex, there are no winners there.

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Yukon Cornholius's picture

I would think that printing fake money to buy real goods would constitute some kind of fraud, but I'm not a bankster or trade negotiator so what would I know.

Hey looks it's ape season again! Go Brady Thomas!

Justin Case's picture

fake money

You can pay with turnips for the settlement of accounts if both parties agree.

BaBaBouy's picture

And... Invade Venezuela ...

Where The Fuck Did that come from ???

sirsmokum's picture


kuz's picture

Did he really say he will invade Venezuela or is it just click bait taken out of context?

Bes's picture


we like'em overt, covert, hot, and cold

the MIC is loving this shit


over the cliff bitchez


Justin Case's picture

MIC is the US tax payer money laundromat. From you to the oligarchs.

keep the bastards honest's picture

Yes the bully lost it and spilt the beans re their plans re 'regime change' ie the elected govt in Venezuela which has resisted a soft coup

MasterControl's picture

Stop watching the news you drama queen.

NotApplicable's picture

The kicker here is that Trump is bypassing the WTO. I need more popcorn.

boattrash's picture

Way OT, but you may want to save some popcorn for this rally/live feed this weekend...

Charlottesville, VA  Unite the Right...last night's torch walk through UVA campus over removal of Confederate statue


Today's live feed...

Starting to look like some "white folks" are getting tired of this shit...

Justin Case's picture

All the internationa laws and agreements that merica is a signatory to do not apply to the exceptional nation. If anyone else tries to disobey the laws or agreements, they will be bombed, civilians as collateral damage and a new puppet regime erected. Lybia was trying to introduce the gold dinar as their currency and look what happened. Iraq, they never did find WMDs. It's all for the MIC and the oligarchs.

Grimaldus's picture

Hillary Clinton, a progressive hero, led the charge to destroy the legitimate government of Libya. And laughed about the horrible execution of M.Gaddafi.

Gaddafi's gold dinar would have been a slap in the face of central banks and give power back to the people. But progressives can't have that as they are invested in state control of everything and zero individual freedom.

To have a crime, you must first have a progressive.

What is really sad is all the progressives complaining about----progressives. Duh.

Just goes to show, the progressive stupid, it burns.







Justin Case's picture

The US also stole 149 tons of Libya's gold and said it was Gaddafi's gold. Wonder what it would sound like if Fort Knox was robbed and the lame street media said they stole "Donald Trump's" gold?

Grimaldus's picture

Thats bad for sure, almost as bad as stealing the South China sea from it's rightful owners yes?








Justin Case's picture

The Philippines base their claims of sovereignty over the Spratlys on the issues of res nullius. The definition of res nullius is "A thing which has no owner or A thing which has been abandoned by its owner is as much res nullius as if it had never belonged to any one."
Japan unconditionally surrendered in 1945 after their defeat in the World War II. Towards the end of 1946, the Chinese government sent a naval task force consisting of four warships to the Spratlys and Paracels to execute demonstrative possessor acts on the spot. The task force sailed from Guangdong (Canton) on December 9, 1946. The two war ships Taiping and Zhongye set course for the Spratlys and after 3 days' sailing, they reached Itu Aba Island, the principal island of the Spratlys on the morning of December 12, 1946. They immediately sent telegraphs to Nanjing to report on their arrival and later stationed on the Itu Aba Island. The Itu Aba Island was surveyed. The task force also reached and surveyed other Spratly Islands including Nanyue Island, Thitu Island, North Danger Reef etc. The symbols of Japanese sovereignty were removed and a Sovereignty Stone Marker was placed on the Itu Aba Island. They also held a take-over ceremony.

In December 1947 Territorial Administration Section of Ministry of Internal Affairs published a list of South China Sea Islands Names and a Map of South China Sea Islands. The Itu Aba Island is renamed to Taiping Island, the Thitu Island is renamed to Zhongye Island, the commander’s name of the task force is also used as a name of a Sand Cay (Dunqian Shazhou). 

So has China ever abandoned her ownership over the Spratlys? No. The Chinese government has never relinquished its claim to these islands. After the "Kingdom of Humantiy and Republic of Songhrati-Morac-Meads" issue Taiwan has restored the garrison on Taiping Island and the navy has frequently patrolled the Spratlys.

Just like what is expressed in Taipei's response to the Philippines: The world has been on notice for years and years that China has a garrison on the Islands. It is childishly naive to entertain any notion that Cloma and associates' claim to "right of discovery" can serve as the legal basis for Philippine government's claiming and the actions as announced by President Marcos. The pursuit of an private and official claim to the Spratly Islands should be held to be a violation of international law and a provocation to China.[1, p71]

Is Geography Proximity a legal Basis for Philippine's claim in the Spratlys?
There is no international law saying geographical proximity can be used here to justify its claims in the Kalayaan Island Group. If we use the proximity basis, many isolated islands in Sulu Sea are much closer to Borneo than to the Philippines, should the Philippines give these islands to Malaysia or Brunei? 

Is National Security a legal basis for the Filipino Claim?
If Philippines national security can serve as a legal basis for its claim in the Spratly Islands. Does that mean the Philippines will just invade any other nation's sovereign land if they feel that they are not secure?

The Philippine's claims in the Spratly Islands, is not legal, although the Philippines try to base their claims on different bases. The Spratlys was not res nullius, and the Philippines' claims based on geographic proximity and national security are illegal.

Grimaldus's picture

No amount of keyboard pounding is gonna make the illegal Chinese aggression legitimate.

Territorial waters are territorial waters and the South China sea ain't anywhere close to China.

It is the classic "belligerent Chinese asshole" on a much larger scale.

Communist China has gotten away with many crimes but it cannot continue to do so and it is foolish for the even the idiot Communist murderers infesting the Chinese government to continue this path.

Free the Chinese people from the boot of it's corrupt totalitarian government if you want to do something.








Ray Zinhell's picture

Owe the bank a little money, and the bank owns YOU.  Owe the bank a lot of money, and YOU own the bank.



Matteo S.'s picture

And when you live on worthless paper, you should avoid bullying those who give real goods in exchange for your worthless paper.

The truth is that the US trade deficit is the result of fake internal demand financed by paper. The US economy is overvalued and the US is living on a standard it can not sustainably afford.

Justin Case's picture

It's not a good idea to antagonise the country that bank rolled yoar Gov'ts spending spree.

Déjà view's picture

Not a good idea to antagonize the country that bank rolled millions of peasant workers whilst maintaining a $350 Bn p.a. trade surplus...

Justin Case's picture

Not good from yoar point of view but good for the merican corporations operating in China that's why merican Gov't says nada

Bill of Rights's picture

Really now financier you say ? I laugh out loud .

idahobandito's picture

China also has unsustainable debt. This will be very interesting.(rowen and martin laugh in quote) Im not sure how it will effect walmart. Maybe there just will be a WHOLE lot of empty shelves, but other manufacturing countries such as Vietnam, Taiwan, Indonesia, etc will make up for some of the loss, at a increased cost. 

Justin Case's picture

Since the majority of their debt is internal. it really doesn't matter does it? They owe it to their own banks, not foreign banks or bond holders. So if they don't pay what will happen?

Antifaschistische's picture

THAT DID IT....don't expect the Chinese to give you massive over/under the table campaign contributions like they did the Clintons!!!

It's only "meddling" if it's Russians!

mkkby's picture

Fake news once again. 

Trump says to launch INVESTIGATION, and the media calls it a trade war.  99% of fuck tards here fall for the headline.

A real trade war would bring back many jobs.  Won't happen because this *investigation* will drag on for 10 years and result in nothing meaningful.  The red/blue/deep state team will block anything good for real people.

Praetorian Guard's picture

Exactly. Maybe a hot war fomented by a trade war? We are living in surreal times....


Come join us for FREE at ALL are welcome!!!

veritas semper vinces's picture

The Chinese debt is internally owned. The American debt is owned mostly by foreigners.

The American trade deficit is 500 Bil $ /year.

(They) want to erase that american debt through a war because it can't be paid .

ThirteenthFloor's picture

If you measure economy in production output goods and energy produced for internal and external consumption (China), opposed to shuffling paper insurance, financial and other non productive GDP counted services (US) then, China exceeded the US in 2014. By all measures China should be worlds large economy by 2018. They also have the worlds largest population of female billionaires - a fun stat.

Wile-E-Coyote's picture

I have been saying this for a while that China is orchestrating this, it's hostile action by proxy. China could stop all of this NK nonsense in the blink of an eye if they really wanted to.

yogibear's picture

Every time the US talks seriously about China's unfair trading, North Korea acts up.

In other words, North Korea's regime acts as a useful idiot for China.

North Korea is totally dependent on China. NK trade with China increased with UN sanctions.

See who is pulling NK's strings here?

This staged act has been going on for decades. No reason to change, it works for China.

Justin Case's picture

China has helped revitilize NK economy and trade. This is good for China's economy. China is a peaceful country not an aggressor like merica.

Where as merica goes around bombing countries, regime changes and imposing sanctions.US media of course leaves out this entire chain of events. Korea’s leadership agreed not to develop nuclear weapons in exchange for food for their starving population, as well as other humanitarian support, in a time of mass starvation. US leaders did not fulfill their promises. Very little food and heating gas was ever delivered. In this context, is it a surprise, or a moral outrage that North Korea would also drop its end of the bargain, and go ahead and pursue nukes? Does such an action really fit the narrative of a “rogue state” lead by “insane” leaders bent on destroying the planet?


Déjà view's picture

Peaceful...ask India and numerous nations bordering S. China sea...
They are also not amused with arrogant trouble making Chinese tourists...numerous examples on youtube (BANNED IN CHICOM!).

Justin Case's picture

Enlighten us with say the death toll of this Chinese aggression. Tks.

Grimaldus's picture

China specializes in killing its own citizens.

Millions upon millions upon millions of their own citizens dead, murdered by their own Chinese government.

Give them a chance, they will start murdering other people moar sooner than later.






Justin Case's picture

China is over 4000 yrs old and merica a young child at 250. What are you tryin to say son? How many has merica killed that weren't their own in 250 yrs.

veritas semper vinces's picture

The truth seems to be unpopular here.

Justin Case's picture

Lots of accusations but no actual proof, but on the otherhand, everyone knows merica's last 20 yr. tour and the devistation left behind.

Grimaldus's picture

Yes. Correct. +10,000









veritas semper vinces's picture

China does not have 85 military bases in SK and 10,000 troops.China does not installed THAAD in SK(aimed at China and Russia,and they are NOT a defence,they can be easily fitted for nuclear missiles.).And China does not have multiple war games in SK aimed at NK.

You see how this works?

Maybe you should think a little before opening your mouth.

Justin Case's picture

US has 160 bases and is still occupying Germany since WWII

Lumberjack's picture

Just like me MENA region is all about ....New Jersey....

AllBentOutOfShape's picture

Maybe?  Of course it is.  It's always been about China.  NK is the ONLY reason the US has to remain in SK... so close to China borders.

Omen IV's picture

The Korean War in 1950 was about China

From the False Flag promoted by MacArthur at th beginning

Omen IV's picture

The Korean War in 1950 was about China

From the False Flag promoted by MacArthur at th beginning

Omen IV's picture

The Korean War in 1950 was about China

From the False Flag promoted by MacArthur at th beginning

Omen IV's picture

The Korean War in 1950 was about China

From the False Flag promoted by MacArthur at th beginning

ebworthen's picture

China would be happy to talk about things - for another 30-50 years.