Trump sparks confusion before doubling down on China tariffs

President Donald Trump doubled down Sunday on his hard line against China after sowing confusion with statements that he might be willing to soften a trade war G7 partners fear threatens the world economy.

At the G7 summit in Biarritz, France, Trump announced a major trade deal with Japan and promised more of the same with Britain, once Brexit is done.

But the positives were overshadowed by a mix-up over his apparent expression of regret for the latest escalation in the US-China dispute.

"I have second thoughts about everything," he conceded to reporters when asked if he regretted his decision on Friday to ramp up tariffs on all Chinese imports, worth some $550 billion, in retaliation for Beijing's earlier hike of levies on US goods.

Just hours later, top White House spokeswoman Stephanie Grisham issued a statement insisting that Trump meant completely the opposite.

"The president was asked if he had 'any second thought on escalating the trade war with China'. His answer has been greatly misinterpreted," she said.

"President Trump responded in the affirmative -- because he regrets not raising the tariffs higher."

Senior US economy adviser Larry Kudlow offered a different spin: "He didn't quite hear the question this morning."

- Pleading for calm -

Others attending the G7 summit of wealthy allies certainly wished for detente between Beijing and Washington.

European leaders pressured Trump to back off what he describes as a historic, all-or-nothing struggle to shift China from decades of rampant intellectual property theft and other unfair trade practices.

Trump is also embroiled in threats of a trade war with France and the European Union.

The latest to voice concern was British Prime Minister Boris Johnson, who told Trump at a Sunday breakfast meeting that "we don't like tariffs on the whole".

"We are in favour of trade peace," he said.

On Saturday, French President Emmanuel Macron called the trade tensions "bad for everyone".

"We have to achieve some form of de-escalation, stabilise things, and avoid this trade war that is taking place all over," he said.

Despite clear signs to the contrary, Trump insisted that there was no friction among his close allies.

"I think they respect the trade war. It has to happen," Trump told reporters.

- Deals with friends -

Trump is using the G7 to showcase what he says if the flip side of his tariff diplomacy: big trade deals.

He and Japanese Prime Minister Shinzo Abe announced an agreement in principle on what Trump said was "billions and billions of dollars" of trade.

They hope to sign the deal, covering industry, digital and agricultural sectors, in September.

Trump also dangled the prospect of deal that was "bigger than we've ever had" with Britain.

- Game of chicken -

But in the game of chicken that is the US-China standoff, a battle between the world's two largest economies, the White House made clear it won't blink.

Trump earlier this week called himself the "chosen one" when it comes to dealing with China. The comment, made while looking theatrically up into the sky, caused widespread derision.

Trump subsequently explained that he'd been joking. But the need to win the China dispute is no joke for a president struggling to poll anywhere near 50 percent ahead of next year's election.

Kudlow said that despite the tit-for-tat tariffs, "negotiations between the two great countries continue," with a Chinese delegation expected to visit Washington in September.

The talks and negotiations continue and I think that's very positive," he said.

At the same time, Trump announced just before coming to the G7 that in addition to ever-higher tariffs, he could invoke an obscure law giving him power to order US companies out of China altogether.

Trump walked this back in Biarritz, saying Sunday that he has "no plan now" to take would amount to a nuclear option, unprecedented in any trade dispute.

Treasury Secretary Steve Mnuchin underlined that it remained possible.

"The president has lots of options," he told Fox News on Sunday.

Trump aides downplay 'order' to US companies to leave China
Washington (AFP) Aug 25, 2019 - Donald Trump's top aides on Sunday downplayed the idea of US companies being forced to abandon China any time soon, as an edict from the president ordering businesses to start looking for alternatives has been met with skepticism.

Treasury Secretary Steven Mnuchin and White House economics advisor Larry Kudlow took to the airwaves from France, where Trump is participating in the G7 summit, to smooth out tensions in the business community prompted by Trump's Friday tweet.

Trump said he has "no plan now" to bring US companies in line, and his aides quickly reinforced the message.

"He would have the authority to do that... He has not done that," Mnuchin told "Fox News Sunday."

Mnuchin said that authority comes from the somewhat obscure International Emergency Economic Powers Act (IEEPA), a federal law passed in 1977.

The law grants the president powers to regulate international trade in the face of an "unusual and extraordinary threat" from abroad to US foreign policy, national security or the economy.

But it has never been used to tip the scales in a trade dispute.

"I think what he was saying is that he is ordering companies to start looking," he added.

The Trump administration wants US businesses to operate in places where "trading partners respect us and trade with us fairly," Mnuchin added.

Senior Trump aide Stephen Miller said in an interview with Fox News: "No American business ought to be wholly dependent on China. It's not a good long-term investment."

- 'Come back to the USA' -

On Friday, Trump -- furious about Beijing's decision to hike tariffs on US goods -- sounded the alarm to homegrown companies just before announcing a planned escalation in tariffs on Chinese imports.

"Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA," he said on Twitter -- sending Wall Street tumbling.

Jennifer Hillman, a professor at Georgetown University's School of Law and a former general counsel in the office of the US Trade Representative, said on Twitter that she does not believe that Trump can invoke the IEEPA because he hasn't met the "prerequisites."

She also said there were no "retroactive controls" on foreign direct investment already made.

On Sunday, Kudlow emphasized: "There's nothing right now in the cards."

"Come back to the USA, where we have very low corporate tax rates and massive deregulation programs," Kudlow said on CNN's "State of the Union."

"Our economy is doing just fine right now, and so come home."

Already, some companies, especially in the clothing and electronics sectors, have started making adjustments to their supply chains and researching production sites outside China, in other countries with low-cost labor.

But business leaders have cautioned that such changes take time.

The National Retail Federation, though critical of China's trade practices, offered a furious reaction on Friday to the latest salvos from the Trump administration.

"It's impossible for businesses to plan for the future in this type of environment," said senior vice president of government relations David French.

"The administration's approach clearly isn't working, and the answer isn't more taxes on American business and consumers. Where does this end?"

For Gerald Seib, the executive Washington editor of The Wall Street Journal, Trump's "order" was a sign of frustration from a president who nevertheless cannot stop the power of capitalism.

"This is a capitalist system and whether presidents like it or not, companies make decisions on what they do and they don't do, what they buy and what they sell and where they make goods based on what's in their own best interests," Seib wrote.

"He can't simply make it happen by snapping his fingers."

Despite the uptick in tensions, Kudlow insisted that US-China trade talks would go ahead next month in Washington.

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