The largest U.S. business lobby urged President Donald Trump and Chinese President Xi Jinping to withdraw new tariffs starting Sunday and return to talks in good faith to end an escalating trade war that is threatening the economy.
“At this moment of uncertainty, it is critical that our leaders take decisive steps to bolster the economy and avoid actions that could turn talk of recession into reality,” Thomas Donohue, chief executive officer of the U.S. Chamber of Commerce, said in a Washington Post opinion piece Thursday.
Donohue’s call for a tariff truce and resumption of negotiations between the U.S. and China comes as the world’s two largest economies are set to impose new duties on each other’s exports in an increasing tit-for-tat battle that has rattled world markets.
The U.S. is staring a 15 percent tariff on about $110 billion in apparel, footwear and other Chinese imports on Sunday, with duties on the balance of about $300 billion in toys, phones and laptops and other products delayed until Dec. 15. Trump is also increasing the duty rate already in effect on $250 billion in other Chinese goods to 30 percent from 25 percent starting Oct. 1, the 70th anniversary of the founding of the People’s Republic of China.
China has vowed additional tariffs on $75 billion of U.S. goods including soybeans, automobiles and oil, with some taking effect Sunday and the rest Dec. 15 in retaliation. Trump said Thursday that the two nations are scheduled to have a conversation about trade, after signs from China that it wouldn’t immediately retaliate against the latest U.S. moves and wants to focus on removing new duties.
A U.S. Chamber survey of 138 recent earnings calls of Fortune 500 companies showed that executives are “overwhelmingly concerned about the economic impact of tariffs,” Donohue said. That’s led to companies sitting on cash and the first decline in business investment in three years, Donohue said in his opinion piece.
While the business community shares the Trump administration’s concern over China’s trade and industrial practices, the escalation of trade tensions doesn’t increase the likelihood of a deal and risks a recession, Donohue said.
“That’s why we believe Trump and Xi should withdraw the tariffs scheduled to take effect this weekend — and then again in December — and instead restart their negotiations,” Donohue said. “Just as growth is not guaranteed, neither is a recession. Both result from the choices we make.”