It has been a while since the market was reminded of how quickly and violently it can be rocked as a result of Trump's mood swings, and moments ago it got a quick refresher when Bloomberg reported that the U.S. is preparing to announce by early December tariffs on all remaining Chinese imports if next month's talks between presidents Donald Trump and Xi Jinping fail to ease the trade war.
As Trump had threatened previously, the latest tariff list would would apply to all imports from China that aren’t already covered by previous rounds of tariffs which would add up to $257 billion using last year’s import figures.
The latest trial balloon may also serve to remind Beijing that the Trump administration remains willing to play hard ball and is prepared to escalate the trade war with China even as companies complain about the rising costs of tariffs and financial markets continue to be nervous about the global economic fallout.
U.S. officials are preparing for such a scenario in case a planned Trump-Xi meeting yields no progress on the sidelines of a Group of 20 summit in Buenos Aires in November, according to two of the people, who declined to be identified to discuss internal deliberations. They cautioned that final decisions had not been made.
According to Bloomberg, the early-December announcement of a new product list would mean the effective date following the mandatory 60-day public comment period, would coincide with China’s Lunar New Year holiday in early February.
In previous months, the U.S. already imposed tariffs on $250 billion in trade with China. After 10% percent tariffs on $200 billion in imports that took effect in September, and are set to increase to 25% on Jan. 1, Trump also threatened to impose tariffs on the remaining goods imports from China, which last year were worth $505 billion.
“We are in the middle of a pretty nasty dispute. We’re in a trade dispute -- I want to use that word because it’s a nice, soft word -- but we’re going to win,” Trump said on Saturday at an event in Indiana. “You know why? ’Cause we always win.”
As Bloomberg also reports, another option considered by the White House is to exclude trade from the meeting agenda but it is unlikely to cancel it altogether. White House Press Secretary Sarah Huckabee Sanders on Thursday said a meeting between Trump and Xi at the Nov. 30-Dec. 1 summit was still in the planning stages.
Following the Bloomberg report, stocks promptly slumped to session lows amid fears of even more trade war escalation...
... while the Yuan dropped, and is approaching the lowest level since December 2016.