China Warns It Will Retaliate After Reuters Reports Trump Will Proceed With Dec 15 Tariffs

A report claiming that President Trump would be meeting  with senior aides on Thursday to discuss whether the US should move ahead with its next round of tariffs has apparently rankled the higher-ups in Beijing. Because Global Times editor Hu Xijin, a popular mouthpiece for the Communist Party, tweeted a rebuttal Thursday morning, warning that "China will surely retaliate" If Washington moves ahead with the Dec. 15 tariffs.

"Such a trade war escalation scenario has been played several times," Hu warned, referring to the previous truces declared between China and the US during the 17-month trade fight, before adding that history would reflect poorly on Trump for walking away from the table.

The warning from Beijing is clear: If Washington moves ahead with the tariff hikes, there will be hell to pay, and we can forget about a trade deal before next year's election; meanwhile Beijing will do everything in its power to crash US stocks.

Reuters initially reported that Treasury Secretary Steve Mnuchin, US Trade Rep. Robert Lighthizer, and White House advisers Larry Kudlow and Peter Navarro would be involved in the meeting.

"I’m expecting them to raise the tariffs on Sunday," one "source" told Reuters, who is very likely Peter Navarro who is using Reuters as a trial balloon conduit, while Larry Kudlow uses Bloomberg and the WSJ. “The administration is preparing its talking points about how that’s the right thing to do. The message is that it will not be painful.”

Recently, Peter Navarro, the Trump advisor and one of the administration's top trade hawks, warned during an interview with Fox Business that Beijing has recently mastered the art of "shaping the narrative" with strategic leaks to Western media, claiming that trade-related leaks from earlier in the week "came from the Chinese not our side."

Navarro, a China hawk, also circulated a separate memo in favor of continued tariffs, arguing that China had increased its purchases of U.S. pork and soybeans solely because of its domestic swine fever outbreak, and that tariffs were not having a negative effect on U.S. growth or the stock market.

The Navarro-penned document and separate memos said tariffs imposed by the Trump administration on China over the past year-and-a-half had not been as devastating as critics had argued, a view not shared by many economists.

“The message is that it will not be painful,” said the one source familiar with the administration’s thinking. “People have been proclaiming for a year and half that the sky is falling, and the sky isn’t falling yet.”