China's economy slows to weakest growth rate on record
President Donald Trump reiterated that he could impose additional tariffs on Chinese imports if he wants, after promising to hold off on more duties in a trade-war truce he reached with China’s Xi Jinping last month.
Stocks fell from a record after Trump made the remarks at a cabinet meeting Tuesday at the White House.
“We have a long way to go as far as tariffs where China is concerned, if we want. We have another US$325 billion we can put a tariff on, if we want,” Trump said. “So, we’re talking to China about a deal, but I wish they didn’t break the deal that we had."
Trump and Xi called a tariff ceasefire and agreed to resume trade talks after meeting at the Group-of-20 summit in Japan in late-June, breaking a six-week stalemate. The U.S. president said he’d hold off on a threat to impose tariffs on an additional US$300 billion in Chinese imports, and that Xi had agreed to buy large amounts of U.S. farm goods in exchange. But those purchases have yet to happen.
U.S. shares snapped a five-day rally following Trump’s remarks Tuesday. Treasury 10-year yields surged earlier in the day after solid economic data added to signs the U.S. expansion is holding up even as central bank officials indicated they’re ready to cut rates.
Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer expect to have another call this week with top trade negotiators in China, and the two may travel to Beijing for meetings if the discussions by phone are productive, Mnuchin said Monday.
Trump resumed pressure on China through tweets this week about the ongoing trade tensions. On Monday, the president indicated that the U.S. tariffs were having their intended impact by squeezing China’s economy.
China released figures this week showing growth in the world’s second-largest economy slowed to 6.2 per cent in the second quarter, the weakest pace since at least 1992 when the country began collecting the data.
Meanwhile, Trump last week complained that China wasn’t living up to its promise of increased purchases of American agricultural goods. “China is letting us down in that they have not been buying the agricultural products from our great Farmers that they said they would. Hopefully they will start soon!” Trump said on Twitter.
The U.S. expects China to announce significant purchases of from U.S. farmers, Trump’s top economic adviser, Larry Kudlow, told reporters Monday, implying that the step is necessary for trade talks between two nations to advance.
The talks broke down in May after the U.S. accused China of reneging on commitments in a draft deal that Mnuchin said had been 90 per cent completed. China has said there’ll be no trade deal unless the U.S. removes all existing tariffs put in place during the year-long trade war.