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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Xena fobe's picture

It's what he was elected to do.  No more "Uncle Sap".  Deplorables are getting hit on all sides from the "International community"  


2_legs_bahhhhhd's picture

You forgot the skidmarked underwear over the head wedgie he gave Justin Turdeau over softwood lumber and nafta.

BeepBeepRichie's picture

China is FUCKED when automation is fully enacted. What to do with the population? Oh, how about a war with mass casualties 

RafterManFMJ's picture

China over allegations that the nation violated U.S. intellectual property rights and forced technology transfers, the official said.

Yeah well fuck off. They've been doing this for 25 years but now our oh so protective government is going to act? All for show folks.

Boris Gudonov's picture

China could push the button on the DPRK leader tomorrow or any time they wished.  Don't be surprised if that happens soon.


HenryHall's picture

I guess it is the question of the age -

is Donald Trump an idiot or does he just pretend to be one?

I'm inclined to think it is the latter.


Wake me when China demands payment in Yuan for exports.

Thom Paine's picture

I think Trump is brilliant here.

He is doing something none of the pervious presidents ever tried - reall try and deal with the situation, before NK go to the next Nuke level.

Seems he is going to make China's life as tough as hell until they do something.


South China sea

Threat to create chaos in NK for them to deal with

Threat to create a major even in their backyard

Threat of trade war

no doubt there will be more............

And Xi has a major conference coming up, with China economy and debt a savage issue.

Trump can keep piling on the pressure to Xi to get Kim out as a minimum.


Can imagine maybe Trump then says it is neccessary to station strategic battlefield nukes in SK to deal with NK threat.......


What did previous Presidents do?

Give NK tons of money on the promise they would be good.

Boris Gudonov's picture

Totally right.  Thank you.


Conax's picture

Monday could be the big dump day. The chinks could dump all their American paper, all at once, in the most thinly traded hours.  They can call it 'a gritch' or a 'fat finger' accident.

At about 10 AM announce that they have acquired 20,000 tons of western gold whether they really have it or not. Put the cherry on top with a lunch hour NK missile attack on Tokyo. (They still hate the Japs.) 

Do you want to play a game?

cherry picker's picture

Big sale on treasuries and other stuff China owns in USA.

Xena fobe's picture

If by "USA", you mean huge real estate holdings, you would be correct. 

Globalist liberals stood by as our land was bought to establish foreign enemy outposts.  Chinese dumping these assets would be the best thing that could ever happen.  And the sooner the better.

Xena fobe's picture

Good. I hope they do. 

TheMagician's picture

They can easily dump 1 Trillion in one week and basically crash the market. If that doesn´t help They can dump another trillion and keep doing this until the pain becomes so hard in the FED, Trump is basically killed the week after in some accident (or even his daughter during her planned trip to India).

They can also issue a National ban on all US goods and even in an extreme case issue a nationalization of all US factories in China.

Why not read RAND´s very interesting report that basically describes how fucked we are if China decides to go ahead with the above mentioned and even try to muscle them military wise.


The U(.S. - China Military Score Card  1996-2017



Yeah, a trade war with that will ever happen before the Deep State caps his ass and probably his entire family in some spectacular fire ball show, viewed and appreciated by even his own voters LOL


2_legs_bahhhhhd's picture

1 trillion.... really?

Who is going to buy them, the fed? They don't want them back.

TheMagician's picture

That is the purpose of the dump. If the FED doesn't buy them the market-price goes basically to zero and with that Zero the entire US economy...

slobbermut's picture

Everyone has a plan until they get punched in the face...

China is far from invulnerable...can they trigger a economic avalanche in America(?), no doubt, but a serious market correction is long long overdue anyway - I say bring it on; America is likely to emerge a healthier nation overall - of course assuming she survives.

J Jason Djfmam's picture

What if nobody buys the dump?

cherry picker's picture

Tired of Trump

MAGA is dead in the water

HRC is no different

False hopes and change bullshit, same as the Nobel Peace Prize warmonger Obama


Anteater's picture

"You will have the best cremations, the best! And they will be so

cheap, and so easy!" Now let's get you out of those dirty clothes,

and into a nice hot shower. Just leave your cash on the counter.

Adolf Trump

Xena fobe's picture

You and Cherry Picker would feel more comfortable if you returned to your home land. 

cherry picker's picture

What makes you think I live in the USA?  Tried it once and moved on, never missed it.

Believe it or not, there are countries out there that are more free, civilized and safer to live in.

shutterbug's picture

Trump has been infected by the Neocon and Obomber viruses ... more conflicts instead of less conflicts is his "religion" now...

Obama was a traitor and Trump has become one ... so the Senate and House wants war with Russia, Trump wants war with China...

Maybe the people should start a political war against their government sell-outs and get rid of them all....

slobbermut's picture

I don't think President Trump wants war with China at all...which of course would likely quickly devolve into war with Russia as well - does definitely appear that the DS operatives of both parties want war with Russia though.  Personally, I think Trump genuinely believes that that the psycho N.K. nutcase can only be dealt with militarily and China is threatening to stop the US from doing what Trump feels is he feels it is necessary to give China cause for reconsideration, and that involves extreme financial pressure.  This stuff has been building for a very very long time, and it just may indeed be that attempting to deal with it leads to WWIII.

Boris Gudonov's picture

Keep your eye on the ball.  The DPRK's  saber rattling has only one purpose:  the enslavement of South Korea.  China would like to see that happen.  Trump knows what he  is  doing.  When your enemies start screaming, at home (i.e., the leftists) and abroad, you know you're on the right track.  This  reminds me of the Reagan era.  Same unhinged screaming from the domestic enemies of America on the left, etc.  Go Trump.

TheMagician's picture

Reagan was, and is, a god compared to this little Asperger struck and clearly mentally ill shit, soiling the very dignity of the highest office in the country.

Father ¢hristmas's picture

Chinese are gonna win this thing.  America has lost all of its diplomatic and economic leverage with the international community.

Germany is the key.  Germany is on the fence right now, but when the Kraut's hop off that fence, the rest of Europe will follow.

The real mirage is American hegemony.  Our politicians get pushed around by Jew bankers.  The same Jew bankers who've been openly questioning Israel's alliance with Murica.

Fuck you think is gonna happen when the intelligence apparatuses of the entire international community secretly, then overtly, push for regime change here to avert nuclear war?

You think these motherfuckers are gonna wrap themselves in the flag and go it alone?


We manufactured evidence against Saddam Hussein to get him outta there.  At least the Iraqis fought, when they come for our guy, the entire govt and media will lay down, and the fat diabetic sloth plebes of America will lay down in kind.

Boris Gudonov's picture

The rest of Europe doesn't follow Germany, especially not Eastern Europe.  So you're wrong there.

America has all the leverage with the "international community" it needs.  There is no "international community" anyway.  That's a leftist myth.  The countries of the world will all look out for their own interests, always have and always will. 

youshallnotkill's picture

There is an "international community" to the extend that the countries' interests align around trade and stability. G20 meetings aren't just for the photo-ops.

Déjà view's picture

Chicom does NOT have any troops in Germany...
Their pet project is did Chicom organization & discipline work out...lights are out all over DPRK...not very well...

Chicom MIC will bankrupt PRC...38 years of back breaking work wasted...gonna be many happy campers in Chicom...

Anteater's picture

'Our guy' as you put it, already inked a $4 BILLION hotel:casino deal

with Xi to build a giant pay-for-play money laundering resort in 'Jina'.

'Our guy' as you put it, already inked a $112 BILLION arms deal with

al-Saud Wahhabi-ISIS terrorist headchoppers, then surged 20,000 of

'our kids' in uniform over to Great Sandbox for ISIS to shoot arms at.

'Our guy' as you put it, roiled the news cycle for a week, threatening

fiery death to 10,000,000s of South Koreans, and 30,000 of 'our kids'

in uniform along the DMZ, in a Fake Nukes and Fake ICBM bluster.

'Our guy' as you put it, put 'fat fuck' Chris Christie, of the NJ Italian

mafiya bringing heroin into US, in charge of pharmaceutical opioids!

'Our guy' as you put it, is no more 'our guy' than Netanyahu is our ally.

No Wall. No Healthcare. No Infrastructure. No Agenda. Just 'bidniz'.

BendGuyhere's picture

Bout. Fucking. Time.

The USA corporate-fascist system has been sucking China's little yellow dick for decades since Kissinger and the CFR figured they could kill 2 birds with China:

1) Impoverish the american working and middle class

2) Thereby institute an ever-tightening system of control, based on Mao's madness, on the unruly american peasants. Literally destroy the american dream and brand.

Oh yeah, corporations LOVE that cheap slave labor.

China, absent the western subsidy of unbalanced trade, is simply what it has been for centuries: a sclerotic, hideously overpopulated society with no innovation.

Pernicious Gold Phallusy's picture

It's hard to be certain what Henry K was thinking at the time. He's had decades to revise and embellish. But I suspect Nixon went to China for reasons related to our cold war with the USSR. The talking heads back then were certain international trade and openness would transform China into a liberal (in the archaic meaning of the word) Western-style democracy in a generation or two. We hear the same advice about NK now.

SmedleyButlersGhost's picture

Iraq Iran Afghanistan Syria China Russia North Korea Venezuela. We're going to need a bigger boat

libfrog88's picture


Boris Gudonov's picture

Trump is a self made billionaire.  What are you?  A penniless moron jerking off in his parent's basement, who wanted to elect the lying crook Hillary Clinton?  Go back to your safe space, snowflake, adults are talking here.


The Gladiator's picture

Sorry, bud. Your comment was about as far away from "adult" talk as anything I've heard.and less than a year here,and you are telling others who can talk here?This ain't your friends page on Facebook.

youshallnotkill's picture

In all fairness give him a small $1M loan, like Trump's dad gave his little Donald, and see if he can make himself a "self made billionaire" too.

Boris Gudonov's picture

In all fairness, most people who are given a million dollars end up poorer than they started.  Google "broke lottery winners" bub.

Baron von Bud's picture

Trump's election has exposed the lying mainstream media, MIC meddling in other nations, the end of the Syrian war and possibly the Afghan one too. Total chaos in DC as the insiders can't rely on the old scams to shake the money tree. We need more chaos to bring the rotten system down. Conscious of what he's doing or not, Trump is doing the voter's will.

johnnycanuck's picture

Voters want Trump to threaten Venezuela?  I would think American voters should be concerned with the state of their own democracy before worrying about Maduro and Co.

slobbermut's picture

Let me would have preferred Hillary the traitorous congenital liar???  

Trump is a far cry from the most qualified standard bearer we might have had, but he appears at least a nationalist who genuinely is attempting to do the right thing for the American people...stymied at nearly every turn by DS mole turncoats in his own party and of course the worthless lot of the Democratic Party and their lackey leftist entrenched appointees - slowly but surely he is making progress.  But I sadly agree, in general, that the majority of Americans deserved nothing fact it is likely only by God's totally unmerited favor that we have Trump instead of Hillary; in reality, considering the opposition and tremendous manifold damage wrought by Obama, Trump is doing amazingly well.  

Who knows, with great luck and continued persistence President Trump may survive long enough to correct some of the more glaring mistakes of his first 6 months in office and go on to be at least semi-successful in deconstructing the DS agenda and altering for the better that path which America is already far along.

DEMIZEN's picture

wake me up when it actuallly happens. China is a member of WTO

TheMagician's picture

They don´t get that. You cannot expect Trump loving rednecks to know anything beyond the label of the beer can in their hands

You can´t label them Republicans or Democrats. They are a new hybrid, grown in a lab of stupidity and short sightedness and with a few remote control instructions in their brains.

Hyjinx's picture

Excellent! About fucking time.

Fake Trump's picture

We are on the same page though not in the same bed.

Fake Trump's picture

Very soon he will declare war with the entire world except the Britian. Theresa May is sucking his cock or he is licking her. I don't know who is doing what.

ThunderStruck's picture

Shit, you mean he is busy licking Theresa May? Damn, that means Melaina isn't getting any, mayby I can weasel my way in there for a taste...

Fake Trump's picture

I  don't know who is getting what. Sometimes it is best not to know.

johnnycanuck's picture

I could have done without that imagery.   Sr. citizen Morticia May in a 69 with old Yellow

Fake Trump's picture

Matured woman can be fantastic.