LDN - Business

Trump says he had to 'take China on,' regardless of short-term impact on U.S. economy

[August 21, 2019] By Humeyra Pamuk and Andrea Shalal

WASHINGTON (Reuters) - U.S. President Donald Trump said on Tuesday he had to confront China over trade even if it caused short-term harm to the U.S. economy because Beijing had been cheating Washington for decades.

Trump's strongly worded comments came hours before his government announced approval of an $8 billion sale of Lockheed Martin <LMT.N> F-16 fighter jets to Taiwan, a move sure to draw Beijing's ire and further dim prospects for a quick trade deal.

On Monday, Vice President Mike Pence had also poked China on another sensitive topic, Hong Kong, calling on Beijing to respect the integrity of the former British colony's laws in its response to mass protests there.

"Somebody had to take China on," Trump told reporters during a White House visit by Romanian President Klaus Iohannis, when asked about wide-ranging tariffs he has imposed on imports from China. "This is something that had to be done. The only difference is I am doing it," he said.

"China has been ripping this country off for 25 years, for longer than that and it's about time whether it's good for our country or bad for our country short term. Long term it's imperative that somebody does this," he said.

China's Foreign Ministry appeared to downplay the comments.

"That the two sides have differences in issues of trade and the economy is not something to be scared of. The key is to resolve the issues through dialogue," ministry spokesman Geng Shuang told reporters in Beijing on Wednesday.

Trump's tariffs and threats of more to come have roiled global markets and unnerved investors as the trade dispute between the world's two largest economies stretches into its second year with no end in sight.

Growing concerns that the trade war could trigger a possible U.S. recession weighed on financial markets last week and seemed to put administration officials on edge about whether the economy would hold up through the November 2020 presidential election.

Democrats on Sunday argued Trump's trade policies were posing an acute, short-term risk. U.S. stock markets slumped last week on recession fears with all three major U.S. indexes closing down about 3% on Wednesday, although they pared their losses by Friday.

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U.S. President Donald Trump speaks to reporters before boarding Air Force One to return to Washington from Morristown Municipal Airport in Morristown, New Jersey U.S. August 18, 2019. REUTERS/Jonathan Ernst

Trump, who is seeking re-election, again dismissed such fears, saying: "We're far from recession."

Secretary of State Mike Pompeo told CNBC that U.S. and Chinese officials were expected to speak by telephone about the trade dispute over the next week to 10 days, followed by a possible face-to-face meeting.

But trade experts said the prospects for productive negotiations were clouded by Washington's increasingly combative stance against China, including the arms sale to Taiwan and its increasingly tough language on Hong Kong.

The Pentagon on Tuesday formally notified Congress that the U.S. State Department had approved the possible sale of 66 F-16 fighter jets to Taiwan, which Beijing considers a renegade province.

China, which has never renounced the use of force to bring the island under its control, has warned it could take unspecified "countermeasures" in response to the sale.

Under Washington's "one-China" policy, the U.S. government officially recognizes Beijing and not Taipei, while assisting Taiwan. It remains the main arms supplier to Taiwan.

In a separate development, the U.S. International Trade Commission said it had found that subsidized steel rack imports from China had materially harmed U.S. industry, locking in duties imposed by the U.S. Commerce Department on such products.

The Commerce Department last month said it had concluded that exporters from China had sold steel racks and parts at less than fair value, with total imports from China of such products amounting to about $200 million in 2017.

(Reporting by Steve Holland, Andrea Shalal and David Alexander; Additional reporting by Huizhong Wu in BEIJING; Writing by Humeyra Pamuk and Lisa Lambert; Editing by Tom Brown & Kim Coghill)

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