Chinese President Xi Jinping warns Trump that China will fight back against American tariffs on $34 billion worth of Chinese goods, reports The Wall Street Journal. This retaliation could be the first signs of a looming trade war with China.
On Thursday, Xi informed a room of 20 American and European multinational chief executives of his plans to strike back against the U.S. According to sources inside the briefing room, Xi said, “In the West you have the notion that if somebody hits you on the left cheek, you turn the other cheek. In our culture we punch back.”
China plans to strike back aggressively on July 6, the same day that Trump’s tariffs on China go into effect. Xi will be imposing tariffs on soybeans, energy and other products of equal value. However, China is at a disadvantage if they solely rely on tariffs, because there are less Chinese goods being exported to the U.S. In 2017, China imported $505,470 worth of U.S. goods but exported only $129,893 worth of goods to the U.S. However, other tactics for fighting back against Trump could include convincing the 1.4 billion Chinese citizens to not buy American products, increasing inspections of imports, delaying licenses, hindering M&A deals that America is involved in, and so on. Xi has also urged his senior officials to begin a campaign promoting China’s global role, as the U.S. is under fire internationally for it’s America First agenda.
China’s aggressive tactic comes after multiple attempts to negotiate peacefully with Trump. Xi’s top economic lieutenant has traveled to Washington, D.C. twice and even offered to buy $200 billion more American products annually. Trump refused, despite the director of the National Economic Council Larry Kudlow calling China’s approach “constructive.” “China’s come to trade. They are meeting many of our demands,” Kudlow said. After China’s attempts to negotiate failed, they are now preparing to fight.
Trump has plans to further amp up his July 6 tariffs by adding in a direct attack on Xi’s Made in China 2025 initiative. The WSJ notes that this initiative is an “industrial plan to dominate high-tech industries including robotics, aerospace and computer chips,” as well as information networks and biotechnology. Basically, Xi seeks to make China the top country for advancements in tech. However, Trump is targeting this plan by barring some technology exports to China, as well as by blocking firms controlled by China from investing in U.S. technology. The official announcement is scheduled for this week, forcing China to downplay their Made in China 2025 plan. Xi has pulled back on state media coverage of the program.
However, Xi still plans to fight against Trump’s restrictions, which could lead to an all-out trade war. One of Xi’s senior officials said, “China is not going to yield to outside pressure and eat the bitter fruit. That’s the negotiation principle set by President Xi.”