U.S. President Donald Trump said on August 9 that he was not ready to make a trade deal with China and had decided that the United States would not do business with Chinese telecoms giant Huawei Technologies for the time being, promng U.S. stocks to fall sharply.
Mr. Trump, speaking to reporters at the White House, also called into question whether another round of scheduled talks would take place in early September. He plans to impose 10% tariffs on a final $300 billion worth of Chinese imports around that time.
“We’re doing very well with China. We’re talking with China. We’re not ready to make a deal — but we’ll see what happens,” Mr. Trump said before departing for fundraisers on Long Island, New York.
“China wants to do something, but I’m not ready to do anything yet. Twenty-five years of abuse — I’m not ready so fast, so we’ll see how that works out.” the President added.
Mr. Trump’s comments fanned fears on Wall Street that the world’s two largest economies were digging in for a longer and costlier trade war, causing major stock indexes to extend losses to more than 1%.
Markets looked set to end a punishing week deep in the red that started with a surprise drop in China’s yuan currency to below 7 to the dollar, promng the U.S. Treasury to label Beijing a currency manipulator.
“Until we get some sort of tangible answers to what the [Trump] administration is going to do with China, this is going to be an overhang on the market, creating plenty of sharp swings,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville New Jersey.
Mr. Trump stood by his currency accusation, saying that the fact that China was subsequently able to stem the yuan’s slide was proof of manipulation and was offsetting U.S. tariffs on Chinese imports, blunting their impact on American consumers.
Mr. Trump’s comments dashed hopes that the U.S. Commerce Department would soon approve some licenses for American companies to resume some sales to Huawei. Commerce in May had put the telecom equipment maker on a national security blacklist, effectively banning sales of U.S. technology, software and services to the firm.
“We are not going to do business with Huawei,” Mr. Trump said, adding that it did not mean that would not change if a trade deal was done with China. “I really made the decision it’s much simpler not to do any business with Huawei.”
In late June, Mr. Trump had agreed with Chinese President Xi Jinping that the United States would ease some U.S. restrictions on Huawei in exchange for increased Chinese purchases of U.S. agricultural commodities while the two countries resumed negotiations to resolve a year-long tariff war.
But a two-day meeting in Shanghai at the end of July failed to yield any significant purchases by China nor progress on U.S. demands for changes to intellectual property, technology transfer and subsidy policies, promng Mr. Trump to announce his next round of tariffs.