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Trump, Stung by Being Attacked as Soft on China, Pushes Ahead on Tariffs

Wilbur Ross, left, the United States commerce secretary, and Premier Li Keqiang of China in Beijing last year. Mr. Ross is expected to return to Beijing this weekend to continue trade talks.Credit...Pool photo by Thomas Peter

WASHINGTON — President Trump, stung by criticism that he has gone soft on China and less worried about Beijing’s ability to disrupt a potential summit meeting with North Korea, reversed course on Tuesday and declared that the United States would impose tariffs and other punitive measures on China.

Barely a week after Treasury Secretary Steven Mnuchin said that the trade war was “on hold” and that tariffs would be suspended as negotiations continued, the White House issued a statement saying the United States would move ahead with its plan to impose 25 percent tariffs on $50 billion worth of imported Chinese goods within the next month.

Mr. Trump’s reversal was yet another twist in a long-running ideological battle in the West Wing between economic nationalists, who channel Mr. Trump’s protectionist instincts, and more mainstream advisers like Mr. Mnuchin, who worry that tariffs and investment restrictions will hurt the stock market and hobble long-term growth.

The nationalists seem to have won this round. While Mr. Trump is sending Wilbur Ross, the commerce secretary, to Beijing this weekend to try again to resolve the dispute, people briefed on the talks said Mr. Trump was frustrated with the first round of trade negotiations and wary of giving Democrats an opening on one of his core issues.

The trade offensive comes at a sensitive moment, days after Mr. Trump pulled out of his planned June 12 meeting with the North’s leader, Kim Jong-un, after suggesting that China played a role in derailing the encounter. But the president has since expressed more optimism about the meeting, and negotiators from Washington and Pyongyang have scrambled to reinstate it, giving Mr. Trump a freer hand to resume his tough approach to America’s greatest economic adversary.

In addition to the renewed trade threat, the United States has hardened its military posture toward China, canceling an invitation for the Chinese to take part in a large Pacific naval exercise and sailing two Navy warships past a handful of disputed islands in the South China Sea. The administration is pushing back against China’s installation of military facilities in the heavily trafficked waterway.

“On every issue, the balance of power in this administration leans toward a more hostile and adversarial relationship with China,” said Jeffrey A. Bader, a former top China adviser to President Barack Obama.

But Mr. Bader cautioned that Mr. Trump’s threat of tariffs could still be a purely tactical move and a cudgel to force concessions from China, similar to the approach he has used with several of America’s closest trading partners.

“To me, it is not at all clear that Trump has turned his back on a deal,” he said.

Last week, the administration announced a sweeping new investigation that could result in tariffs on imported automobiles — a move trade experts said was designed to ramp up pressure on Mexico and Canada in negotiations over the North American Free Trade Agreement.

On Friday, temporary exemptions to steel and aluminum tariffs that the White House granted to the European Union, Canada and Mexico are set to expire, raising the question of whether the countries will fold to Mr. Trump’s trade requests or retaliate.

Hours after the tariffs on China were announced, the Chinese Ministry of Commerce accused the White House of going back on its word, even as it hinted that Beijing expected such a reversal.

“We feel surprised by the tactical statement issued by the White House, and yet it was also unsurprising,” a statement from the ministry said, adding that China would “defend the interests of the Chinese people and core national interests.”

“This is clearly contrary to the consensus that China and the U.S. reached not long ago in Washington,” the statement said.

The last round of trade talks ended on May 19 with the two sides issuing an upbeat but vague joint statement that revealed little progress toward resolving a long list of complaints from the American negotiators. Mr. Trump, who made getting tough on China a centerpiece of his campaign, has often talked about challenging what he believes are its unfair trade practices.

But his advisers are deeply divided over how best to do it. Some, like Mr. Mnuchin and Mr. Ross, are focused on a compromise deal that would require China to buy huge amounts of American products to reduce its trade surplus, while still forestalling the possibility of a trade war.

Others like Peter Navarro, a top White House trade adviser, and Robert Lighthizer, the United States trade representative, have pushed for tougher action. They want China to undertake radical reforms, ending the subsidies it provides to developing industries and allowing American companies equal access in the Chinese market.

Hours after Mr. Mnuchin said a trade war was on hold, Mr. Lighthizer, who has been leading the investigation into China’s trade practices, issued a statement that was viewed as a repudiation of his colleague. He said that “real work” still needed to be done to make changes in the Chinese system, and that the United States would use “all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations.”

Mr. Trump’s handling of a Chinese telecom company, ZTE, became another flash point. On Friday, he said he had reached a deal that would allow the firm, which was recently banned from buying American components as punishment for violating United States sanctions, to remain in business. That prompted a slew of criticism from lawmakers that he was backing off his tougher promises on trade and letting a Chinese telecom company that did business with Iran and North Korea off the hook.

“Yes they have a deal in mind. It is a great deal... for #ZTE & China,” Senator Marco Rubio, Republican of Florida, said in a tweet.

Senator Chuck Schumer of New York, the Democratic leader, tweeted, “If the administration goes through with this reported deal, President Trump would be helping make China great again.”

Those swipes rankled Mr. Trump, according to current and former White House officials. In a midterm election year, they said, the president does not want to leave an opening to Democrats on trade. Mr. Trump expressed his unhappiness to Mr. Mnuchin, who had urged him to settle the ZTE issue and seek a trade truce with Beijing.

“There may be some momentary confusion, but his default position is, you’ll never get to the right of him on China,” said Stephen K. Bannon, who served as Mr. Trump’s chief strategist and is a leader of the nationalist movement.

In April, the administration detailed a list of Chinese goods that would be subject to tariffs, including flat-screen TVs and medical devices. It then held a series of hearings on the tariffs, giving the public a chance to influence the targeted products.

On Tuesday, White House officials said that they would issue the final list of goods subject to the tariffs by June 15, and impose the duties shortly after that. Mr. Trump has also threatened additional tariffs on $100 billion of Chinese products that, for now, will not go into effect.

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How China Became Trump’s Trade Nemesis

China’s explosive rise was a shock to the global trading system. For decades, Western economies like the United States have struggled with the growth of this economic powerhouse.

“If you look at what’s happening with trade in China, it hasn’t been fair for many, many years.” When President Trump rails against China, he says things like, “Our country is being taken advantage of,” or, “We lost years ago by presidents and others allowing this to happen.” He’s probably referring to the past four decades, when China has grown faster than any major economy in history and gone from a poor, developing country to an economic powerhouse that is challenging America’s spot at the top of the international food chain. “Its emergence as a global power was so sharp and so extreme, faster than the world can handle, in some ways faster than China can handle.” The U.S. and other Western nations kick-started much of China’s rise by opening up trade. What they haven’t figured out is how to get this fundamentally different economic system to play by free market rules. A pivotal moment came in 2001 after 15 years of negotiations. China joined the World Trade Organization, which sets the rules for free and fair trade between member countries. “All of the countries that were in the club at the time put enormous demands on China for what they needed to do.” The Chinese committed to sharply lower tariffs and reduced some of the government’s role in how business gets done. But they argued then, as they still do now, that China is a developing country and so should be held to less stringent free trade standards. The hope was that these first steps would lead to even more sweeping changes. “Why did we assume that? The experience of communism was through the lens of the Soviet Union and its satellite states, which was ultimately not a success. And so the presumption was, China’s going to want to become like us, more market oriented.” “After China joined the W.T.O. in 2001, you saw this enormous surge of Chinese exports to everywhere in the world, and to the United States in particular.” “They were kind of an elephant hiding behind mice with respect to other countries in global trade negotiations at the time.” The U.S. and other countries complained that China was not opening its markets enough, and keeping the value of its currency artificially low to make Chinese exports more attractive. “China has been making great strides using tools that are really not acceptable under the global trade system.” China has continued to operate as a centrally planned economy. The government owns, influences or subsidizes major industries, giving them an artificial competitive edge. There are heavy restrictions on foreign investment, and foreign companies are pressured to share their technologies. “China has become more market oriented, but dating back to probably 2007, 2008, I think it was recognized that China wasn’t on the path to become more like us. And so then countries began to think about, well, what do we do instead?” “Some view the rise of Asia-Pacific with suspicion and fear. America doesn’t.” Enter the Trans-Pacific Partnership, initiated by Bush, signed by Obama. “When implemented, It won’t just boost trade and support jobs in our 12 countries. It will help set stronger rules for trade across the Asia-Pacific.” Put less politely, It was also supposed to be a bulwark to China’s growing economic power. “The idea was that China would want to join this great trading pact, and so they would have this incentive to reform their economy.” “This is the one that President Trump ripped up on his third day in office.” “The first one is withdrawal of the United States from the Trans-Pacific Partnership.” “I had seen the erosion of popular and congressional support for trade for many years. But I’d never seen anything like Donald Trump.” “Our founding fathers understood trade much better than our current politicians, believe me.” Trade is generally accepted by economists as win-win for countries on the whole. But Trump says that China is winning and the U.S. is losing. “He and people in his administration argue that past approaches to dealing with China haven’t worked. It’s not actually that profitable to negotiate with them. We need to focus on this much bigger trade measure, and then we can really hit them with a very aggressive, forceful action.” “He seems intent on generating a moment of crisis.” “We put a $50 billion tariff on, then we put a $100 billion tariff on. And you know at a certain point, they run out of bullets.” But dynamics have changed. Today, China sees its economy as strong enough to withstand almost anything the U.S. can throw at it.

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China’s explosive rise was a shock to the global trading system. For decades, Western economies like the United States have struggled with the growth of this economic powerhouse.CreditCredit...Johannes Eisele/Agence France-Presse — Getty Images

The White House also said it would move forward with restrictions on Chinese investment and with stronger export controls to limit the access that Chinese people and companies have to American technology — a measure the administration said was for national security purposes.

Those restrictions will be announced by June 30 and adopted soon after that, the administration said, adding that the United States would also continue to pursue a trade case it filed against China at the World Trade Organization involving intellectual property rights.

Mr. Schumer offered the president highly conditional praise. “This outline represents the kind of actions we have needed to take for a long time, but the president must stick with it and not bargain it away,” he said in a statement.

Representative Richard E. Neal, Democrat of Massachusetts, said the administration was merely trying to save face “by rattling its saber with new deadlines,” after having undermined American national security interests by easing penalties on ZTE.

“Without a coherent strategy,” he said, “it’s hard to see the renewed commitment to threatening tariffs and investment restrictions as anything but more bluster and chaos.”

Mr. Trump’s willingness to cut a deal on ZTE also raised questions about his motives, given that days before he said he would help the company, China granted his daughter, Ivanka Trump, seven new trademarks across a broad collection of businesses, including books, housewares and cushions.

Mr. Trump’s latest trade moves have provoked retaliation from China, which has promised its own potential tariffs on $50 billion in American goods. Chinese officials say they do not dismiss anything as an idle threat.

“We have to consider this seriously — we have to listen to his words and watch his actions,” Li Gang, the vice president of the Commerce Ministry’s research and training institute, said in a recent interview in Beijing.

A correction was made on 
May 29, 2018

An earlier version of this article misstated when the Trump administration said it would proceed with punitive trade-related measures against China. It was on Tuesday, not Monday.

How we handle corrections

Keith Bradsher contributed reporting from Shanghai.

A version of this article appears in print on  , Section A, Page 1 of the New York edition with the headline: U.S. Resumes Trade Dispute Against China. Order Reprints | Today’s Paper | Subscribe

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