Bob Bryan

The cost of President Donald Trump's <a id="73f43fd6-858c-329a-a329-3079d9a39025" href="https://www.businessinsider.com/category/us-china-trade-war?utm_source=intl&amp;utm_medium=ingest"> trade war </a> is starting to pile up.

Trump has cheered billions "pouring into the coffers of the USA," but new data shows companies' costs starting to reach new records:

<ul><li> In October, US companies paid $6.2 billion in tariffs, up from $4.4 billion in September and just $3.1 billion in October 2017. </li><li> That's a 104% year-over-year increase, despite just a 13% jump in the value of imports, according to data compiled by Tariffs Hurt the Heartland, a pro-free trade group, and research firm The Trade Partnership. </li></ul>

The total payments in October is the largest monthly tariff collection amount in history, according to the groups.

Read more: <a id="97024386-599c-33f2-a1c6-24c7af20c347" href="https://www.businessinsider.com/us-china-trade-war-record-trade-deficit-trump-2018-12?utm_source=intl&amp;utm_medium=ingest"> Trump is losing the trade war with China based on his favorite report card, and it's probably going to keep getting worse» </a>

Tariff rates have been higher in the past, especially when duties were <a id="324b54f6-122b-3e61-acbb-33c3a4980814" href="http://congressionalresearch.com/RL33665/document.php?study=U.S.+Federal+Government+Revenues+1790+to+the+Present"> the primary source of government funds </a> before the income tax was created in 1913. But inflation means the nominal value of the tariff collections today is much higher.

Trump's tariffs on <a id="27237059-50ad-3d41-abd3-c1b2d26f929c" href="https://www.businessinsider.com/category/steel-tariff?utm_source=intl&amp;utm_medium=ingest"> steel </a> , <a id="a9c8cdfc-44d7-3bbf-a7e0-7b5889e1f979" href="https://www.businessinsider.com/category/aluminum-tariff?utm_source=intl&amp;utm_medium=ingest"> aluminum </a> , and nearly $250 billion worth of <a id="912aa8ae-79b1-3291-abf7-ef1fa5698547" href="https://www.businessinsider.com/category/china-tariff?utm_source=intl&amp;utm_medium=ingest"> Chinese goods </a> are clearly having an effect, the data showed:

<ul><li> Tariff collections on steel hit $446 million in October, and aluminum tariffs collected $134 million, according to Tariffs Hurt the Heartland. </li><li> Since the steel and aluminum tariffs kicked off in May, US firms have paid $3.1 billion to import the metals. </li></ul>

October also marked the first month that <a id="6bb92701-d65e-3a1a-a886-326c5e2b7c9b" href="https://www.businessinsider.com/trump-china-trade-war-tariff-chinese-goods-2018-9?utm_source=intl&amp;utm_medium=ingest"> Trump's 10% tariff </a> on roughly $200 billion worth of Chinese goods went into effect, adding onto <a id="9b4266fa-9fa3-3b08-ac54-cbbfbedfd5c3" href="https://www.businessinsider.com/trump-china-trade-war-items-2018-7?utm_source=intl&amp;utm_medium=ingest"> 25% tariffs on $50 billion worth </a> of Chinese goods that were imposed back in July. The new round caused a marked jump in tariff collections on those goods.

<ul><li> Prior to the tariffs being imposed, companies paid $0.4 billion a month to import the same goods, which jumped to $2.6 billion in October. </li><li> That means Trump's tariffs cost US firms $2.2 billion in additional costs in October alone and $4 billion more since China tariffs were first imposed in July. </li><li> In sum, US companies paid $7.4 billion more in tariffs due to Trump's trade war since the first tariffs went into place in May, and the amount is steadily increasing. </li></ul>

tariffs paid on goods hit by trump's trade war chart

For his part, Trump has cheered the amount of money coming into the Treasury, tweeting about the collections as part of a trade tirade on Tuesday.

"We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN," he said.

Read more: <a id="7a65ac9a-1696-3a3a-a158-f7c6640245ab" href="https://www.businessinsider.com/trump-tariffs-trade-war-us-retail-restaurants-fed-report-2018-12?utm_source=intl&amp;utm_medium=ingest"> We just got a new sign that the pain from Trump's trade war is getting worse, and it's spreading to even more businesses like restaurants» </a>

But despite the president's proclamations, most economists warn that these costs are <a id="8fe1a5b4-ef30-3026-ace3-a17e491af5d0" href="https://www.taxpolicycenter.org/taxvox/what-tariff-and-who-pays-it"> mostly being borne by American companies </a> . In turn, a growing number of firms are reporting <a id="2ccf27d5-896d-333a-a2c6-ae4e656e5479" href="https://www.businessinsider.com/trump-tariffs-china-trade-war-us-companies-prices-2018-10?utm_source=intl&amp;utm_medium=ingest"> a delay in investments </a> , <a id="7fee6270-fc9c-3851-a7a8-3897bc0d8684" href="https://www.businessinsider.com/trump-tariffs-trade-war-layoffs-business-losses-2018-8?utm_source=intl&amp;utm_medium=ingest"> slower pace of hiring </a> , and <a id="4346b975-6bf5-3443-a479-cd8502bfb0c8" href="https://www.businessinsider.com/trump-tariffs-trade-war-causes-150-layoffs-at-chicago-manufacturer-2018-8?utm_source=intl&amp;utm_medium=ingest"> even cost cuts like layoffs. </a> If cost increases continue, US companies have warned, consumer prices could also start to rise.

If that were to happen or if Trump were to go through with threats to place tariffs on imported cars or more Chinese goods, the costs could eventually become a drag on US GDP growth.

NOW WATCH: <a id="db520c74-e29c-3064-aa8c-1a75075d6fc5" href="https://www.businessinsider.com/lindsey-graham-holy-hell-attorney-general-jeff-sessions-mueller-donald-trump-2017-7?utm_source=intl&amp;utm_medium=ingest"> Lindsey Graham once warned there would be 'holy hell to pay' if Trump fired Jeff Sessions </a>

<ul><li> <a href="https://www.businessinsider.com/us-china-trade-war-record-trade-deficit-trump-2018-12?utm_source=intl&amp;utm_medium=ingest">Trump is losing the trade war with China based on his favorite report card, and it's probably going to keep getting worse</a> </li><li> <a href="https://www.businessinsider.com/trump-tariffs-trade-war-us-retail-restaurants-fed-report-2018-12?utm_source=intl&amp;utm_medium=ingest">We just got a new sign that the pain from Trump's trade war is getting worse, and it's spreading to even more businesses like restaurants</a> </li><li> <a href="https://www.businessinsider.com/wh-chief-of-staff-john-kelly-will-resign-soon-reports-claim-2018-12?utm_source=intl&amp;utm_medium=ingest">White House chief of staff John Kelly reportedly plans to resign after his feud with Trump got so bad they stopped speaking</a> </li></ul>

SEE ALSO: Trump's 'Tariff Man' tweet was an homage one of his favorite presidents who ran on a platform of tariffs

US companies forked over a record amount of tariffs in October ($6.2 billion!) because of Trump's trade war

Shrinking the US trade deficit has been a key goal of President Donald Trump's trade war.

But the <a id="e568964d-d2f4-3f17-a544-13cafb21343d" href="https://www.census.gov/foreign-trade/Press-Release/current_press_release/index.html"> US Census Bureau announced </a> Thursday that the US trade deficit grew to $55.5 billion in the month of October, the highest in exactly 10 years. That was a 1.7% jump from September, as imports rose by 0.2% and exports fell by 0.1%.

Trump has long been focused on the trade deficit as a signal that his administration's tariffs on Chinese goods and metals are working, despite the fact that <a id="4ada2af4-0b1b-394a-a3b1-6afb3710a212" href="https://www.nytimes.com/2018/03/05/us/politics/trade-deficit-tariffs-economists-trump.html"> most economists discount </a> the measure as a sign of effective trade policy.

Looking at the main <a id="640e93e2-6202-3fa9-a9a6-993522ef2454" href="https://www.businessinsider.com/category/us-china-trade-war?utm_source=intl&amp;utm_medium=ingest"> target of the trade war </a> , China, the trade deficit was similarly dismal. The unadjusted goods trade deficit hit $43.1 billion in October, the highest level ever.

While Trump may not like the results, there are good reasons <a id="b1db62aa-c2c5-3fd9-afef-ab2bcb04a13a" href="https://www.businessinsider.com/trump-trade-war-tariffs-china-mexico-us-trade-deficit-grows-2018-10?utm_source=intl&amp;utm_medium=ingest"> the trade deficit is expanding. </a> And part of the blame lies in the <a id="29391231-aca8-32f4-ae02-0f45899fb298" href="https://www.washingtonpost.com/business/economy/why-the-us-trade-deficit-is-getting-bigger--despite-all-of-trumps-promises/2018/11/27/f2c2dd34-de1f-11e8-b3f0-62607289efee_story.html"> president's own policies </a> .

<ul><li> <a href="https://www.businessinsider.com/us-gdp-q3-2018-advance-estimate-2018-10?utm_source=intl&amp;utm_medium=ingest">The US economy is stronger,</a> and US consumers' appetite is outpacing the country's ability to produce the goods they want. </li><li> This means the US needs goods from other countries to satisfy consumer demand, leading to import growth. </li><li> The increase in demand is in part because of the significant amount of fiscal stimulus injected into the economy by Trump's tax cuts and the massive bipartisan budget deal. </li><li> Goosing the economy, while helping Trump claim victories on things like a stronger GDP, also means the president's trade report card looks worse. </li></ul>

At the same time, exports are cooling because of retaliatory tariffs on US products:

<ul><li> For example, <a href="https://www.businessinsider.com/trump-trade-war-tariffs-usda-farmers-aid-soybeans-2018-8?utm_source=intl&amp;utm_medium=ingest">soybean exports to China</a> — a major chunk of US agricultural exports — have collapsed <a href="https://www.businessinsider.com/us-china-trade-war-soybeans-left-rotting-thanks-to-lack-of-storage-2018-11?utm_source=intl&amp;utm_medium=ingest">as a result of the trade war</a> . </li></ul>

The trade policy exacerbates the existing issues that were already causing weak export growth, Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote Thursday.

"The stronger dollar and slower growth in China and Europe are hurting exports, and the tariffs are a real problem too; exports of soybeans fell by $0.8 billion to a four-year low, down 43% year-over-year," Shepherson said.

Read more: <a id="5012bad6-e324-3da1-ae62-bfd1026666e1" href="https://www.businessinsider.com/trump-xi-jinping-trade-war-tariff-delay-deal-2018-12?utm_source=intl&amp;utm_medium=ingest"> The US-China trade war might still rage on despite a breakthrough deal between Trump and Xi </a>

Those existing drags on exports — the strong US dollar and slowing economic growth in foreign countries — and the tariffs combine to make the perfect recipe for weakness on that side of the deficit ledger.

"Moderating global momentum, the stronger dollar, and protectionisttrade policies will keep weighing on exports in the near-term, while sturdy domestic demand and limited spare capacity keep import growth healthy — further widening the deficit," said Jack McRobie and Gregory Daco, economists at Oxford Economics.

A few things could turn around the deficit situation. If the US economy were to cool off, as many economists expect, it could slow the pace of import growth. At the same time, if Trump is able to strike a trade deal with China, a prospect of which economists and experts are more skeptical, export growth could rebound and close the gap.

<ul><li> <a href="https://www.businessinsider.com/us-china-trade-war-huawei-cfo-arrest-sabrina-wanzhou-trump-tariffs-2018-12?utm_source=intl&amp;utm_medium=ingest">Chinese tech giant Huawei's CFO proves Trump's trade war is 'escalating to a new level'</a> </li><li> <a href="https://www.businessinsider.com/china-us-trade-war-trump-xi-trade-trade-deal-2018-12?utm_source=intl&amp;utm_medium=ingest">For the first time, China confirmed major details about the Trump-Xi trade deal. It could only intensify the scramble over the next 90 days.</a> </li><li> <a href="https://www.businessinsider.com/trump-tariff-man-tweet-william-mckinley-trade-china-2018-12?utm_source=intl&amp;utm_medium=ingest">Trump's 'Tariff Man' tweet was an homage one of his favorite presidents who ran on a platform of tariffs</a> </li></ul>

Trump is losing the trade war with China based on his favorite report card, and it's probably going to keep getting worse

After seemingly easing trade tensions with China over the weekend at the G20 summit, the US once again drew the ire of China on Wednesday after <a href="https://www.businessinsider.com/canada-arrests-huawei-cfo-at-us-authorities-request-report-2018-12?utm_source=intl&amp;utm_medium=ingest" id="2a886d6e-5007-3eac-aeb1-49e2506c8d3f"> the arrest of </a> <a href="https://www.businessinsider.com/canada-arrests-huawei-cfo-at-us-authorities-request-report-2018-12?utm_source=intl&amp;utm_medium=ingest" id="67efde5b-ce5d-348a-a704-f14f7943b7b5"> Sabrina Meng Wanzhou </a> , the CFO of Chinese tech giant Huawei.

Wanzhou, the daughter of Huawei founder Ren Zhengfei, was arrested in Canada and is expected to be extradited to the US on charges of violating US sanctions on Iran.

The move prompted immediate condemnation by <a href="https://www.businessinsider.com/china-demands-canada-release-arrested-huawei-cfo-meng-wanzhou-2018-12?utm_source=intl&amp;utm_medium=ingest" id="6356be77-ad5d-3c68-a038-937b0d270938"> Chinese officials and state media </a> . It also raised growing fears among investors and analysts that the trade truce between President Donald Trump and Chinese Xi Jinping may already be dissipating.

"We believe this is a clear signal that the trade war is escalating to a new level," Zhiwei Zhang, Deutsche Bank's chief China economist, said Thursday. "We think the probability of US and China reaching a trade deal by March 1 has dropped to 30% from 40%."

Stock markets across Asia and Europe dove following the news, and US markets <a href="https://www.businessinsider.com/stock-market-news-europe-and-asia-crash-as-trade-war-fears-continue-2018-12?utm_source=intl&amp;utm_medium=ingest" id="2282ad94-9fb9-3682-a91d-03251afced07"> opened similarly ugly </a> .

While most of the focus during the trade war has been on Trump's tariffs, Meng's arrest is proof that the Trump administration's battles with China aren't confined to duties on goods.

Read more: <a href="https://www.businessinsider.com/trump-xi-jinping-trade-war-tariff-delay-deal-2018-12?utm_source=intl&amp;utm_medium=ingest" id="c32aeafc-b6a0-3cb9-af11-f3acd954e1b3"> The US-China trade war might still rage on despite a breakthrough deal between Trump and Xi» </a>

The Department of Justice and other parts of the Trump administration have stepped up their crackdown in an attempt to address what the administration sees as systemic problems with China's economic practices.

In just the last few months, the Department of Justice has taken several actions:

<ul><li> September 25: The DOJ arrested Ji Chaoqun, a Chinese national in the US on a student visa, alleging that he was working for China's Ministry of State Security in <a href="https://www.nbcnews.com/politics/national-security/justice-department-charges-chinese-national-aiding-espionage-n913101">an attempt to contact engineers and scientists</a> in the US with Chinese backgrounds. </li><li> October 10: The <a href="https://www.washingtonpost.com/world/national-security/chinese-spy-charged-with-stealing-us-military-secrets-and-extradited-for-prosecution/2018/10/10/b2a7325c-cc97-11e8-920f-dd52e1ae4570_story.html?utm_term=.6d042c640b14">US arrested </a> <a href="https://www.washingtonpost.com/world/national-security/chinese-spy-charged-with-stealing-us-military-secrets-and-extradited-for-prosecution/2018/10/10/b2a7325c-cc97-11e8-920f-dd52e1ae4570_story.html?utm_term=.6d042c640b14">Yanjun Xu</a> , a senior MSS officer, after luring him to Belgium. The DOJ alleged the Chinese officer was attempting to steal trade secrets. </li><li> November 1: The <a href="https://www.justice.gov/opa/pr/chinese-intelligence-officer-charged-economic-espionage-involving-theft-trade-secrets-leading">DOJ announced the creation of a task force</a> called the China Initiative that is designed to go after Chinese economic espionage. </li></ul>

While Meng's arrest was the most high-profile of the actions to date, the pattern paints a picture. Former US Attorney General Jeff Sessions made the administration's position clear in a press conference announcing the China Initiative.

"As the cases I’ve discussed have shown, Chinese economic espionage against the United States has been increasing — and it has been increasing rapidly," Sessions said. "We are here today to say: enough is enough. We’re not going to take it anymore."

The US is also <a href="https://www.businessinsider.com/us-china-tariff-trade-war-trump-xi-jinping-meeting-signals-2018-11?utm_source=intl&amp;utm_medium=ingest" id="7d7a71b3-a782-3eb2-a935-2afcf9923398"> considering expanding the list of technologies </a> that are banned from being exported to China, including as well as investment restrictions for Chinese firms in the US.

The Section 301 investigation on which the US tariffs were originally predicated focuses heavily on the theft of US companies' intellectual property and forced technology transfers. Zhang said the chances of a deal to address those issues just got slimmer following Meng's arrest.

"Public opinion in China will likely become more negative in respect to the trade war, and potentially against US companies," Zhang said. "The government may find it difficult to tell the public that they have offered significant concessions to the US. The trade talk has just been resumed at the G20 meeting; now its outlook has darkened."

NOW WATCH: <a href="https://www.businessinsider.com/harris-faulkner-fox-news-anchor-black-female-cable-news-2018-11?utm_source=intl&amp;utm_medium=ingest" id="9571241c-46e8-386e-a1c2-4aa90137345b"> Fox News' Harris Faulkner is the only black woman in cable news with a daily show: 'It's a tremendous amount of responsibility' </a>

<ul><li> <a href="https://www.businessinsider.com/china-us-trade-war-trump-xi-trade-trade-deal-2018-12?utm_source=intl&amp;utm_medium=ingest">For the first time, China confirmed major details about the Trump-Xi trade deal. It could only intensify the scramble over the next 90 days.</a> </li><li> <a href="https://www.businessinsider.com/trump-tariff-man-tweet-william-mckinley-trade-china-2018-12?utm_source=intl&amp;utm_medium=ingest">Trump's 'Tariff Man' tweet was an homage one of his favorite presidents who ran on a platform of tariffs</a> </li><li> <a href="https://www.businessinsider.com/trump-twitter-tariff-man-china-trade-war-negotiations-xi-jinping-2018-12?utm_source=intl&amp;utm_medium=ingest">Trump calls himself 'Tariff Man' during raging tweetstorm on China trade war, and the stock market tanks</a> </li></ul>

SEE ALSO: Trump's newest pick to lead the trade fight against China reportedly took the Chinese by surprise and could be bad news for a deal

The arrest of Chinese tech giant Huawei's CFO proves Trump's trade war is 'escalating to a new level'

China is trying to catch up to President Donald Trump's trade deal promises as questions linger about the agreement he made with Chinese President Xi Jinping at the G20 summit.

After two days of relative silence, a spokesperson from China's Ministry of Commerce <a id="71ee17ff-b786-370f-a44e-aded5529cda6" href="http://www.mofcom.gov.cn/article/ae/ag/201812/20181202813512.shtml"> offered a short statement </a> on the preliminary agreement Tuesday night:

<ul><li> The official confirmed for the first time that China had agreed to the 90-day "timetable and road map" to negotiate a further trade deal with the US. </li><li> The official also said China is committed to implementing certain actions agreed to during the Trump-Xi dinner but did not provide specifics. </li></ul>

<a id="e8f0d1f5-8172-381d-a5a9-ca65090e4582" href="https://www.bloomberg.com/news/articles/2018-12-05/china-says-it-ll-implement-trade-agreements-with-the-u-s-asap?srnd=premium"> According to reports </a> , China is planning to reopen up its markets to American soybeans and natural gas. US soybean farmers in particular have been hard hit by the trade fight, as China's tariffs on US product have <a id="d413bb6a-7cde-3289-a319-a729593e27e7" href="https://www.businessinsider.com/us-china-trade-war-soybeans-left-rotting-thanks-to-lack-of-storage-2018-11?utm_source=intl&amp;utm_medium=ingest"> choked off their largest market </a> .

But it was still unclear whether the tariffs on those American goods would be eliminated, how much of each good China would buy, and the timetable for the purchases.

Additionally, the official made no mention of the Trump administration's issues with China's broader economic policies such as intellectual property theft, forced technology transfers, forced partnerships with Chinese firms, and more.

The statement from the Chinese comes after skepticism over the deal began to grow, which helped contribute to a sharp sell off in US stocks on Tuesday. Discrepancies between the US and Chinese accounts on the meeting, Trump's promise that China would lower auto tariffs going unconfirmed by the Chinese, and a lack of follow up from Beijing all cast doubts on the nature of the negotiations.

Read more: <a id="a4cf08a4-f157-3788-a75e-fe445f253af2" href="https://www.businessinsider.com/trump-twitter-tariff-man-china-trade-war-negotiations-xi-jinping-2018-12?utm_source=intl&amp;utm_medium=ingest"> Trump calls himself 'Tariff Man' during raging tweetstorm on China trade war» </a>

Trump touted the Chinese statement in a tweet on Wednesday, pointing to it as an example that China is serious about reaching a more detailed agreement.

"Very strong signals being sent by China once they returned home from their long trip, including stops, from Argentina," Trump said. "Not to sound naive or anything, but I believe President Xi meant every word of what he said at our long and hopefully historic meeting. ALL subjects discussed!"

The most concrete step toward fulfilling the agreement appears to be an announcement from China's National Development and Reform Commission on <a id="9fbc4ece-0675-34e2-a67b-5a329618bc50" href="https://www.bloomberg.com/news/articles/2018-12-04/china-announces-new-punishments-for-intellectual-property-theft"> punishments for violating intellectual property </a> protections.

Chinese firms stealing US IP, either through counterfeiting or coercing companies to hand over trade secrets, was a major focus of the US Trade Representative's initial investigation into unfair trade practices. That investigation was the mechanism that allowed Trump to impose the tariffs on China.

Beijing said there would be 38 different punishments for violations of IP protections, including restrictions on government contract opportunities and access to loans.

Read more: <a id="ea0c72b4-d83e-31b3-a691-6f9a0e6c0744" href="https://www.businessinsider.com/us-china-trade-war-robert-lighthizer-trump-delegation-2018-12?utm_source=intl&amp;utm_medium=ingest"> Trump's newest pick to lead the trade fight against China reportedly took the Chinese by surprise and could be bad news for a deal» </a>

Eswar Prasad, a professor of trade policy at Cornell University, told Business Insider that the announcement is beneficial both for China — which is trying to encourage more domestic innovation — and for the US-China trade tensions.

But Prasad warned that it depends on how strictly Beijing enforces the rules.

"The vigor and consistency with which these regulations are going to be enforced, especially in the case of state-owned enterprises and large private companies, remains the key open question," he said in an email. "China does not exactly have a stellar record of keeping to its commitments to other countries, especially in the context of industries that are part of the government’s plan to restructure the economy towards high-tech, high-value added sectors."

Derek Scissors, a resident scholar at the American Enterprise Institute who previously advised the Trump team on China, held a dimmer view.

"Punishment for IP violations was the major issue 10 to 15 years ago," Scissors said in an email. "It has since been emphatically replaced by the Chinese government actively seeking to acquire IP — legally, through coercion, or through cyber-theft. So this addresses about 5%" of the complaint.

While China seems to be trying to catch up to the Trump administration's pronouncements about the trade deal, the Trump team is also struggling to gets its story straight, as well.

The most obvious instance of crossed wires came Monday when Larry Kudlow, Trump's top economic adviser, said the 90-day delay to tariff rate increases would start on January 1. The White House had to scramble to correct the timeline, saying the timeline actually began December 1.

But Kudlow's slip is indicative of a <a id="00b54ccf-a565-383a-a226-0a28da5fee5e" href="https://www.washingtonpost.com/business/economy/i-am-a-tariff-man-trump-says-as-china-talks-show-signs-of-sputtering/2018/12/04/516425e4-f7e0-11e8-8c9a-860ce2a8148f_story.html?utm_term=.7aa42a574a27"> messy communications pattern </a> from the Trump team that has only fueled confusion. Multiple members of the administration spent the early part of the week walking back <a id="f331953a-b17d-3086-a173-b008c1952c0f" href="https://www.businessinsider.com/trump-tweet-on-china-tariffs-on-us-cars-after-xi-deal-2018-12?utm_source=intl&amp;utm_medium=ingest"> Trump's surprise declaration </a> that China would lower tariffs on US-made cars, a deal that <a id="6d2f2249-367e-34ec-a1be-9a1d1be7d0a9" href="https://www.bbc.com/news/business-46436269"> Kudlow later admitted </a> was not set in stone.

And <a id="6828b83a-1164-3013-a725-b83efc8e0523" href="https://www.businessinsider.com/trump-twitter-tariff-man-china-trade-war-negotiations-xi-jinping-2018-12?utm_source=intl&amp;utm_medium=ingest"> Trump's dubbing of himself as a "Tariff Man </a> ," as well as <a id="59ae67c9-85d0-3d91-adb4-3b0160c49be6" href="https://www.businessinsider.com/trump-xi-jinping-trade-war-tariff-delay-deal-2018-12?utm_source=intl&amp;utm_medium=ingest"> general skepticism </a> that the two sides can reach an agreement in such a short time means that the next 90 days of China-US talks will be incredibly volatile.

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<ul><li> <a href="https://www.businessinsider.com/trump-tariff-man-tweet-william-mckinley-trade-china-2018-12?utm_source=intl&amp;utm_medium=ingest">Trump's 'Tariff Man' tweet was an homage one of his favorite presidents who ran on a platform of tariffs</a> </li><li> <a href="https://www.businessinsider.com/trump-twitter-tariff-man-china-trade-war-negotiations-xi-jinping-2018-12?utm_source=intl&amp;utm_medium=ingest">Trump calls himself 'Tariff Man' during raging tweetstorm on China trade war, and the stock market tanks</a> </li><li> <a href="https://www.businessinsider.com/us-china-trade-war-robert-lighthizer-trump-delegation-2018-12?utm_source=intl&amp;utm_medium=ingest">Trump's newest pick to lead the trade fight against China reportedly took the Chinese by surprise and could be bad news for a deal</a> </li></ul>

For the first time, China confirmed major details about the Trump-Xi trade deal. It could only intensify the scramble over the next 90 days.

President Donald Trump sent Twitter alight on Tuesday by <a id="ef64e015-ec9e-3868-ad48-1874554d4e0e" href="https://www.businessinsider.com/trump-twitter-tariff-man-china-trade-war-negotiations-xi-jinping-2018-12?utm_source=intl&amp;utm_medium=ingest"> referring to himself as a "Tariff Man," </a> drawing <a id="6ce637c2-4fe1-34a7-a143-d75200d71958" href="https://uproxx.com/viral/trump-tariff-man-reactions/"> superhero comparisons </a> and helping to raise concerns about the preliminary US-China trade agreement.

But the origin of the name is not the pages of a comic book. Rather, one of Trump's top trade advisers said it was an homage to late 19th century president.

Peter Navarro, Trump's hawkish trade adviser, said the tweet was a reference to Republican President William McKinley. Here's the history lesson via Navarro's interview on Fox Business:

"Let me give you a littlebackground on that becausethat's an homage to one of PresidentTrump's favorite presidents, WilliamMcKinley.WhenMcKinleywas running in1896 on a platform of prosperity, protection, and patriotism, hesaid he is 'a tariff man standing on a tariff platform.' WhatMcKinleydid when he gotelected [was] put in strong tariffs and a realigned the currency. It actually not only set off tremendous catalytic growth, but also helped realign the Republican Party."

McKinley was known during his time in Congress for <a id="8c70ef3a-9688-323d-a3ea-82e955d610c7" href="https://history.house.gov/Historical-Highlights/1851-1900/The-McKinley-Tariff-of-1890/"> the eponymous McKinley tariff </a> that was passed in 1890. It raised tariffs by as much as 50% on various products. The Ohioan later ran for president during the 1896 election on a pro-tariff platform.

Read more: <a id="a1c10540-c825-364b-a660-09e147da2863" href="https://www.businessinsider.com/trump-twitter-tariff-man-china-trade-war-negotiations-xi-jinping-2018-12?utm_source=intl&amp;utm_medium=ingest"> Trump calls himself 'Tariff Man' during raging tweetstorm on China trade war, and the stock market tanks» </a>

Similar to Trump's desire to boost domestic businesses, McKinley argued that the tariffs would help to protect US companies and lead to greater economic prosperity.

But the historical comparisons virtually end there. For one, tariffs were <a id="9e16db05-15fc-3d10-a656-d77b67cbc6c1" href="https://taxfoundation.org/federal-tax-revenue-source-1934-2018/#per"> the primary source of federal revenue </a> at the time since there was no income tax, making them much more important for government functions.

Additionally, supply chains are <a id="d8d5d157-8ead-388a-aa32-fb7deda26dc9" href="https://www.businessinsider.com/trump-tariffs-trade-war-layoffs-business-losses-2018-8?utm_source=intl&amp;utm_medium=ingest"> much more complex </a> in the present day. Instead of producing goods from start to finish in a factory, parts are taken from all over the world. Now, <a id="109f0d81-73df-3995-a2d2-0d55952acd3e" href="https://www.businessinsider.com/trump-tariffs-what-is-a-tariff-meaning-for-prices-consumer-2018-3?utm_source=intl&amp;utm_medium=ingest"> tariffs are more likely </a> to end up harming US businesses that rely on those parts.

And the McKinley tariff ignores more recent examples of tariffs causing economic damage. From <a id="3e9ef959-4c5a-3b1d-a611-b50c44e0f626" href="https://www.businessinsider.com/trump-tariffs-trade-war-great-depression-mistake-2018-5?utm_source=intl&amp;utm_medium=ingest"> the disastrous Smoot-Hawley tariffs </a> during the Great Depression to George W. Bush's <a id="11bd8a7a-3c02-3193-aa22-e32fc4deec5e" href="https://www.businessinsider.com/what-is-a-tariff-trump-on-steel-aluminum-economic-impact-2018-3?utm_source=intl&amp;utm_medium=ingest"> failed steel tariffs in 2002 </a> , tariffs in the 20th and 21st centuries have generally <a id="b4644636-6472-3077-a5cf-20187dea8f01" href="http://time.com/4352542/history-donald-trump-tariffs/"> been a net economic negative </a> for the US.

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Trump's 'Tariff Man' tweet was an homage one of his favorite presidents who ran on a platform of tariffs

President Donald Trump warned as part of a Tuesday tweetstorm that a potential trade deal with China could still fall through but said preliminary negotiations with Chinese President Xi Jinping were encouraging.

"President Xi and I want this deal to happen, and it probably will. But if not remember, I am a Tariff Man," Trump said. "When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power."

Trump has long been a "Tariff Man," advocating for duties on imported cars and goods as far back as the 1980s. In a 1990 interview with Playboy, the then-real estate investor said <a id="54628c0a-c0cb-3aff-a6e4-a38e6122adb7" href="https://www.businessinsider.com/donald-trump-playboy-interview-trade-foreign-policy-japan-2017-2?utm_source=intl&amp;utm_medium=ingest"> imposing tariffs on Japanese cars </a> would be the first order of business if he ever won the presidency.

The warning comes days after Trump and Xi reached a preliminary agreement to delay the further escalation of the US-China trade war.

But Trump also expressed optimism for the 90-day negotiating period before tariffs are set to increase. He said Xi already agreed to take concrete steps towards alleviating the trade war.

"China is supposed to start buying Agricultural product and more immediately," he tweeted. "President Xi and I want this deal to happen, and it probably will."

Read more: <a id="5012bad6-e324-3da1-ae62-bfd1026666e1" href="https://www.businessinsider.com/trump-xi-jinping-trade-war-tariff-delay-deal-2018-12?utm_source=intl&amp;utm_medium=ingest"> The US-China trade war might still rage on despite a breakthrough deal between Trump and Xi </a> »

While the two sides left talks in Buenos Aires, Argentina, with an upbeat attitude, confusion and a lack of clarity around what exactly Trump and Xi agreed to has <a id="e2c58e3a-ee2b-3317-aca5-b53c373ead92" href="https://www.businessinsider.com/trump-xi-jinping-trade-war-tariff-delay-deal-2018-12?utm_source=intl&amp;utm_medium=ingest"> left many experts skeptical that a concrete deal </a> can be reached in such a short window.

The two countries <a id="7dc732a7-84b2-36a9-a3a6-06d1a1ec9e5d" href="https://www.bloomberg.com/news/articles/2018-12-02/u-s-china-trade-truce-side-by-side-comparison-of-statements"> issued wildly different statements, </a> and Trump administration officials have <a id="61bc018b-b122-3efe-afbb-1d48307ea6ee" href="https://www.businessinsider.com/trump-xi-trade-war-deal-white-house-correction-on-kudlow-tariff-delay-2018-12?utm_source=intl&amp;utm_medium=ingest"> offered changing accounts </a> of the deal's details in the days since the meeting.

What is clear is that if no deal or further extension of talks is agreed upon by March 1, the US's tariffs on roughly $200 billion worth of Chinese goods will increase from the current 10% rate to 25%. Trump also threatened to impose tariffs on the remaining $267 billion worth of Chinese goods not currently subject to tariffs.

While the the negotiations are held over the next three months, the tariffs on $360 billion worth of goods flowing between the two countries will also remain in place.

The president also confirmed that US Trade Representative Robert Lighthizer, who has been critical of China in the past, will lead the negotiations with the help of other administration officials.

"The negotiations with China have already started. Unless extended, they will end 90 days from the date of our wonderful and very warm dinner with President Xi in Argentina," Trump said. "Bob Lighthizer will be working closely with Steve Mnuchin, Larry Kudlow, Wilbur Ross and Peter Navarro on seeing whether or not a REAL deal with China is actually possible. If it is, we will get it done."

But despite the uncertainty and threats, Trump also said he was open to signing a possible agreement if one is reached between Chinese and US negotiators.

"But if a fair deal is able to be made with China, one that does all of the many things we know must be finally done, I will happily sign," Trump said. "Let the negotiations begin."

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Trump says he is a 'Tariff Man' during raging tweetstorm on China trade war negotiations

President Donald Trump named US Trade Representative Robert Lighthizer as the lead negotiator in follow-up talks China over trade, elevating the long-time China hawk to the most critical role over the next few months.

The move could dampen investor and business enthusiasm over <a href="https://www.businessinsider.com/trump-china-trade-war-tariffs-90-days-2018-12/?utm_source=intl&amp;utm_medium=ingest" id="ae98a038-6cdd-3f90-a12d-826aa77b6896"> the preliminary trade agreement </a> Trump made with Chinese President Xi Jinping at the G20 summit last weekend.

Lighthizer is also the third point person since trade negotiations with the Chinese began in 2017, following Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin, neither of whom were able to strike a concrete, long-term deal with Beijing.

The appointment of Lighthizer <a href="https://www.wsj.com/articles/trump-says-u-s-china-relations-have-taken-big-leap-forward-1543847551?mod=article_inline" id="ac866376-656f-3cdb-adf2-23101ff4b15e"> reportedly took Chinese officials </a> by surprise, as Lighthizer has a more critical view of China than Mnuchin.

According to <a href="https://www.wsj.com/articles/the-architect-of-trumps-tough-on-china-policy-1523028038?mod=article_inline" id="3f9fd306-43fa-3e29-a2d3-3b01386c24b1"> the Wall Street Journal </a> , Lighthizer opposed China's entry into the World Trade Organization in the 1990s and more recently was a driving force behind Trump's decision to impose tariffs on roughly $250 billion worth of Chinese goods.

Lighthizer's office was also responsible for the original report earlier this year on China's alleged theft of US intellectual property that formally kicked off the tariff process. In a follow-up report in November, the US Trade Representative's office reiterated that China had made no progress in addressing the underlying issues that led to the trade war.

Read more: <a href="https://www.businessinsider.com/trump-xi-jinping-trade-war-tariff-delay-deal-2018-12?utm_source=intl&amp;utm_medium=ingest" id="c32aeafc-b6a0-3cb9-af11-f3acd954e1b3"> The US-China trade war might still rage on despite a breakthrough deal between Trump and Xi» </a>

During his time in President Ronald Reagan's administration, Lighthizer was also known as a hard-nosed negotiator. In one famous incident, Lighthizer <a href="https://www.businessinsider.com/robert-lighthizer-cigar-story-trump-trade-war-chief-ustr-china-hawk-2018-9?utm_source=intl&amp;utm_medium=ingest" id="a38068b7-7f10-3a78-a461-3788550d8f56"> smoked an entire box of Cuban cigars </a> as a tactic to throw off counterparts from the then-Soviet Union. During the same period, <a href="https://www.wsj.com/articles/lighthizerhas-long-seen-chinese-trade-policy-as-unfair-to-u-s-1543860249?tesla=y&amp;mod=article_inline" id="72989342-4786-3af6-a74b-71a453743760"> Lighthizer became known </a> among Japanese officials as "the missile man" after throwing a set of proposals back as a paper airplane.

Trump appears to have confidence in the US Trade Representative after Lighthizer was able to reach a deal to update the North American Free Trade Agreement (NAFTA) with Mexico and Canada.

White House officials downplayed Lighthizer's role, saying that the talks would be a team effort.

"And, by the way, I personally — I'm very happy that Bob Lighthizer is going to be running the trade negotiating side and the monitoring side. And again, Mr. Mnuchin will be very involved. Others of us will be very involved," Larry Kudlow, the director of the National Economic Council and pro-free trade advocate, said in a conference call Monday.

Commerce Secretary Wilbur Ross told CNBC on Tuesday that the concern over Lighthizer's stronger stance on China was overblown since the US Trade Representative always takes the lead in trade negotiations.

"Bob Lighthizer by statute is the official negotiator for theUS on trade deals, just as he was in the US-Mexico-Canada deal," Ross said. "So I don't know why anybodywould have been that surprisedthat he was the lead negotiator.He has been acting in thatcapacity, so that's not really news."

Talks between the two sides are expected to start in mid-December after a 90-day delay before US tariffs on $200 billion worth of Chinese goods could increase from 10% to 25%. If the sides don't reach a deal by that point, Trump has also threatened to impose tariffs on the remaining $267 billion worth of Chinese goods that are currently not subject to duties.

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SEE ALSO: Trump's favorite trade war report card is looking uglier than ever

Trump's newest pick to lead the trade fight against China reportedly took the Chinese by surprise and could be bad news for a deal

The US and China on Saturday took their most significant step yet toward ending their trade war, as US President Donald Trump and Chinese President Xi Jinping <a id="e0e14062-a3dc-3196-a2dc-f597bb50cb4b" href="https://www.businessinsider.com/trump-china-trade-war-tariffs-90-days-2018-12/?utm_source=intl&amp;utm_medium=ingest"> agreed to a temporary economic cease-fire </a> .

<ul><li> The deal reached at the G20 summit in Argentina includes a 90-day delay in the imposition of new tariffs. </li><li> The US also agreed to hold off on increasing the tariff rate on $200 billion worth of Chinese goods to 25% from 10%. </li><li> China agreed to purchase US agricultural and energy goods, and the two sides said they would work to resolve differences on key structural issues such as China's theft of US intellectual property. </li></ul>

Trump touted the agreement with Xi on Twitter, calling it a good deal for American farmers and businesses.

"My meeting in Argentina with President Xi of China was an extraordinary one," Trump tweeted. "Relations with China have taken a BIG leap forward! Very good things will happen. We are dealing from great strength, but China likewise has much to gain if and when a deal is completed. Level the field!"

While there are plenty of issues still left to resolve in the longer term, the delay in further tariff actions was applauded by US business groups and investors.

"It is clear the administration has heard the voices of those negatively impacted by existing tariffs," Matthew Shay, the CEO of the National Retail Federation, said in a statement. "We hope this 90-day tariff pause will lead to a positive resolution that removes tariffs altogether and improves US-China trade relations."

Other industry groups hit by the tariffs, ranging from tech to farming, also welcomed Trump's deal. But many urged the president to continue to try to reach a long-term agreement to end the trade war.

The markets also gave the delay a thumbs-up, with stocks in both China and the US making solid gains on Monday.

<h1> Opposing views of the same meeting </h1>

But the meeting leaves many questions unanswered. Among those questions is what exactly was agreed to in Saturday's meeting.

The statements from the Trump administration and Beijing following the dinner <a id="208673a7-96ec-3d47-a488-75c03bddeb8f" href="https://www.bloomberg.com/news/articles/2018-12-02/u-s-china-trade-truce-side-by-side-comparison-of-statements"> offer substantially different interpretations </a> of what the two sides agreed to, which raises questions over how sustainable the cease-fire will be:

<ul><li> For example, the official statement from China does not mention the 90-day deadline, and Chinese state media's <a href="https://www.washingtonpost.com/world/asia_pacific/after-trump-summit-no-mention-in-china-of-90-day-deadline-or-trade-concessions/2018/12/03/1e9cc71e-f6dd-11e8-863a-8972120646e0_story.html?utm_term=.843d09941a19">references to the deadline</a> attribute the idea to the White House. </li><li> There were also differences on China's preferences of US goods and on the timeline for a trade-deficit reduction. </li><li> Beijing did not mention Trump's Sunday-night declaration that China agreed to lower tariffs on American-made cars. </li></ul>

Two economists at Citi, Li-Gang Liu and Xiaowen Jin, said the US was more focused on long-term changes to China's economic policies, while Beijing's statement kept its eye focused on shorter-term fixes that would reduce the US-China trade disparity.

"Comparing the official statements, we find that the US stresses more on China's structural reform issues on forced technology transfer, IP protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, while China continues to highlight its willingness to increase imports from the US to reduce the trade imbalance as well as open its markets wider for foreign participation," the economists said.

Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said the short-term deal was a "face-saving measure that allowed both sides to come away with wins for their domestic audiences."

"The agreement between Presidents Trump and Xi at the G20 is a deferment of disaster rather than a fundamental rebuilding of the trading relationship between the US and China," Shepherdson said.

Given the substantial number of issues still left to be resolved — from intellectual-property theft to Chinese support for state-controlled corporations — a 90-day window is far too short to reach a broad agreement, said Ed Mills, a policy analyst at Raymond James.

"If we have not been able to reach an agreement in the last eight months that increases market access and lowers tariffs, it’s difficult to see a 90 day deadline significantly changing the Chinese position on key issues," Mills said.

"Such differences are unsurprising after a brief dinner (with translation) where each side tends to see and hear what they want," added Chris Krueger, a strategist at Cowen Washington Research Group. "Still, all together, it is hard to imagine that a comprehensive agreement can be reached in 90 days that can be credible, monitored, and enforced."

This could lead to another punt, similar to Trump's delays on imposing the steel and aluminum tariffs on allies, Krueger said. But even that may not be enough time to get a long-lasting deal together.

Negotiations are set to kick off in mid-December, when Chinese officials come to the US to meet with US Trade Representative Robert Lighthizer. But while the discussions are encouraging, there is a real chance the tariffs on the $200 billion worth of goods get a boost to 25% come March.

"President Trump is now directly involved in the dealmaking process, increasing the sensitivity around the final outcome," Mills said. "We see it as somewhat to very likely given these dynamics that negotiations begin to fray and the threat of a tariff hike to 25% with an additional tariff package as further leverage reenter market considerations."

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The US-China trade war might still rage on despite a breakthrough deal between Trump and Xi

The rushed, vague nature of President Donald Trump's <a id="075228b5-3871-3990-a206-17687ba0f055" href="https://www.businessinsider.com/trump-china-trade-war-tariffs-90-days-2018-12/?utm_source=intl&amp;utm_medium=ingest"> trade agreement with Chinese President Xi Jinping </a> was on full display Monday, as the White House had to walk back a timing announcement by Trump's top economic adviser.

As part of the deal reached by Trump and Xi during the G20 summit in Buenos Aires, Argentina, on Saturday, the US pledged to delay the increase of the tariff rate from 10% to 25% on $200 billion worth of Chinese goods. The rate was set to increase on January 1, a move that would have significantly escalated the <a id="e7d3728a-661b-314b-a70a-ec55bcb5ecf6" href="https://www.businessinsider.com/category/us-china-trade-war?utm_source=intl&amp;utm_medium=ingest"> ongoing trade war </a> between the two countries. Instead that increase will be delayed 90 days.

The countdown clock to the tariff increase was originally assumed to start on December 1, meaning new tariffs could be imposed starting on March 1. But Larry Kudlow, Trump's National Economic Council director and top economic adviser, threw that into question during a call with reporters on Monday.

"Well, on the tariff raise, the President has said 90 days beginning January 1, which is when it was going to go — the 10 to 25 was going to go into effect," Kudlow said.

This caught many people by surprise, evidently including the White House. News website <a id="578c78ad-bf09-3458-ad6c-882f80178800" href="https://www.axios.com/white-house-corrects-kudlow-china-trade-truce-dec-1-09065467-e0f7-4737-b627-1c529de153b6.html"> Axios reported </a> that officials inside the White House were taken aback by Kudlow's comment, leading to a correction by the White House just a few hours later. In an updated transcript of the call, the administration clarified that the 90-day delay would in fact start December 1.

The switch on timing was just another in a string of slapdash efforts by the Trump administration to fill in the blanks on Trump and Xi's broad agreement.

Read more: <a id="c32aeafc-b6a0-3cb9-af11-f3acd954e1b3" href="https://www.businessinsider.com/trump-xi-jinping-trade-war-tariff-delay-deal-2018-12?utm_source=intl&amp;utm_medium=ingest"> The US-China trade war might still rage on despite a breakthrough deal between Trump and Xi» </a>

The US and China kicked off the confusion when the two sides released very different statements about the meeting. Numerous items referenced in the US press release were omitted from the Chinese version and vice versa.

Additionally, the statements came with few details, making it hard to determine each country's exact commitments. As an example, the Trump administration touted China's promise to buy American agricultural, energy, and industrial goods. However, China did not refer to the purchases, and the Trump administration offered no details on the size of the purchases or the timing of the deal.

Adding to the confusion was <a id="3e03eb7f-0b29-3973-a82a-9a9618dfeb68" href="https://www.businessinsider.com/trump-tweet-on-china-tariffs-on-us-cars-after-xi-deal-2018-12?utm_source=intl&amp;utm_medium=ingest"> Trump's sudden tweet on Sunday </a> that said China "agreed to reduce and remove tariffs on cars coming into China from the US." Currently the rate on American-made cars coming into China is 40%.

But it was unclear exactly what the timing on the auto-tariff reduction will be and the level to which the tariffs will drop.

Kudlow said China will lower the rate to zero, below the 15% tariff rate for all other imported cars coming into the country. Lowering the rate for US cars would require China do the same for all other countries as well.

<ul><li> <a href="https://www.businessinsider.com/trump-xi-jinping-trade-war-tariff-delay-deal-2018-12?utm_source=intl&amp;utm_medium=ingest">The US-China trade war might still rage on despite a breakthrough deal between Trump and Xi</a> </li><li> <a href="https://www.businessinsider.com/trump-tweet-on-china-tariffs-on-us-cars-after-xi-deal-2018-12?utm_source=intl&amp;utm_medium=ingest">Trump says China will 'reduce and remove tariffs' on car imports from the US</a> </li><li> <a href="https://www.businessinsider.com/trump-china-trade-war-xi-jinping-meeting-at-g20-course-2018-11?utm_source=intl&amp;utm_medium=ingest">Trump is about to embark on a trip that could end the trade battle with China — or plunge the US into an economic Cold War</a> </li></ul>

SEE ALSO: The US-China trade war might still rage on despite a breakthrough deal between Trump and Xi

White House confusion over Trump's promised tariff delay shows the slapdash nature of the trade deal with Xi Jinping

Facing the possibility of an arduous and difficult approval process for a new trade deal with Mexico and Canada, President Donald Trump hinted he would attempt to force Congress' hand.

Trump on Saturday threatened to begin the formal process to pull the US out of the existing <a id="0566f962-7782-3824-a30b-237b807768bf" href="https://www.businessinsider.com/what-is-nafta-is-it-good-for-america-2017-2?utm_source=intl&amp;utm_medium=ingest"> North American Free Trade Agreement (NAFTA), </a> a move that would be designed to give Congress little option but to approve the US-Mexico-Canada Agreement (USMCA).

"I'll be terminating it within a relatively short period of time. We get rid of NAFTA. It's been a disaster for the United States. It's caused us tremendous amounts of unemployment and loss and company loss and everything else," Trump told reporters aboard Air Force One. "That’ll be terminated. And so Congress will have a choice of the USMCA or pre-NAFTA, which worked very well."

<a id="116447da-defe-36cc-a3c7-2613bb874ef4" href="https://www.businessinsider.com/g20-summit-trump-signs-usmca-nafta-update-mexico-canada-2018-11?utm_source=intl&amp;utm_medium=ingest"> Trump formally signed the USMCA </a> alongside Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena Nieto at the G20 summit on Friday. In the wake of ceremonial signing, lawmakers on both sides of the aisle <a id="1c0229e4-e1e3-37b6-acfb-0e523900fa20" href="https://www.businessinsider.com/trump-mexico-canada-trade-deal-nafta-update-usmca-trouble-2018-11?utm_source=intl&amp;utm_medium=ingest"> expressed some misgivings about the USMCA. </a>

"I think President Trump's goal here was to light a fire under Congress," Larry Kudlow, Trump's chief economic adviser, told reporters on Monday.

Under the Trade Promotion Authority that Trump is using to advance the USMCA, only <a id="ac1b92e8-821f-3029-a0cc-702f1f9e5a9d" href="https://www.businessinsider.com/us-canada-mexico-trade-deal-usmca-nafta-congress-vote-block-2018-10?utm_source=intl&amp;utm_medium=ingest"> a majority of each chamber </a> needs to vote for the deal for it to become law. But Democrats, especially those in the incoming House majority, have the chance to influence the deal through so-called implementation legislation that changes US law to abide by the trade deal's rules.

Democratic leader Nancy Pelosi has repeatedly said that the implementation legislation must include language that ensures some aspects of the agreement are stringently enforced.

"Whatever they're calling it now, it has some kind of gobbledygook name. The trade agreement formerly known as Prince — no, I mean, formerly known asNAFTA , is a work in progress," Pelosi said at a press conference on Friday. "We are admiring of the Trade Representative and the attempts he has made to make sure that we are aware of what is in it. But what isn't in it yet is enough enforcement reassurances regarding provisions that relate to workers and to the environment."

Read more: <a id="c6d41cdd-b63a-3f39-a796-bc768ec3dfd3" href="https://www.businessinsider.com/g20-summit-trump-signs-usmca-nafta-update-mexico-canada-2018-11?utm_source=intl&amp;utm_medium=ingest"> Trump just sealed the landmark trade deal with Mexico and Canada, but there's still a long road toward victory» </a>

Some Republicans have also raised concerns with the deal. In particular, a group of nearly 40 conservative members in the House pointed to language that would extend <a id="6875ae12-2197-3de6-a2a2-d75ec4eab372" href="https://www.politico.com/story/2018/10/23/new-nafta-lgbtq-rights-874004"> workplace protections to transgender workers </a> , saying the USMCA is "no place for the adoption of social policy."

Negotiators added a footnote to the USMCA prior that attempted to address the concerns, saying that current US law would satisfy the requirement. But some GOP members still balked at the language. Rep. Andy Harris, one of the Republicans who signed onto the letter, told Business Insider that his concerns remain.

"Regardless of the footnote, I still have grave concerns about the inclusion of this language in the USMCA, as well as the precedent that the inclusion of this language in any trade agreement represent," Harris said in a statement.

Given the possibility of Democratic defections, Trump needs almost every Republican vote for the deal to pass.

Trump has decided to invoke a tricky tactic that could blow up in his face, analysts said.

The leader of any NAFTA nation can invoke Article 2205 of the deal, which would start a six-month clock before the US could formally pull out of the deal. In the event that the US did pull out of NAFTA, tariff rates between the US and the other two members would revert to pre-NAFTA levels. The move would also likely have major economic repercussions and rattle global markets.

"The basic idea/strategy: Do not give recalcitrant Democrats the choice between the status quo and USMCA," Chris Krueger, a strategist at Cowen Washington Research Group, wrote Monday. "It is USMCA or bedlam at the borders with a six-monthNAFTAversion of a hard Brexit."

There are also legal questions about whether Trump can remove the US from NAFTA unilaterally.

"The President has the authority to terminate NAFTA, but it is unclear whether Congressional approval is needed, and regardless, would likely be fought in the courts," wrote Sacha Tihanyi and Brittany Baumann, strategists from TD Securities.

Democrats have repeatedly insisted that any attempt to remove the US from NAFTA would require congressional approval. <a id="6313fe6d-db2e-32de-aba9-a3086cbb0729" href="https://www.everycrsreport.com/files/20160907_R44630_cf1dbf8a7d2aed6754b8db5643b387cff5e816a2.pdf"> A report </a> from the Congressional Research Service also appeared to back up that assertion.

Tihanyi and Baumann suggested that the advanced stage of the ratification process and possible negatives of failing to ratify the USMCA likely neuter Trump's threat.

"Termination risks are less meaningful at this stage," the pair said. "The agreement is signed, and the big changes in USMCA, particularly rules of origin and wage clauses, have bipartisan support. Furthermore, political incentive is low for lawmakers (Democrat or Republican) to terminate trade agreements."

<ul><li> <a href="https://www.businessinsider.com/trump-xi-jinping-trade-war-tariff-delay-deal-2018-12?utm_source=intl&amp;utm_medium=ingest">The US-China trade war might still rage on despite a breakthrough deal between Trump and Xi</a> </li><li> <a href="https://www.businessinsider.com/us-canada-mexico-trade-deal-usmca-nafta-details-dairy-auto-dispute-resolution-2018-10?utm_source=intl&amp;utm_medium=ingest">The US, Canada, and Mexico's newly signed trade pact looks a lot like NAFTA. Here are the key differences between them.</a> </li><li> <a href="https://www.businessinsider.com/g20-summit-trump-signs-usmca-nafta-update-mexico-canada-2018-11?utm_source=intl&amp;utm_medium=ingest">Trump just sealed the landmark trade deal with Mexico and Canada, but there's still a long road toward victory</a> </li></ul>

Trump is about to play a dangerous game of chicken with Democrats to try to ram through his trade deal with Mexico and Canada

President Donald Trump announced on Sunday that China will lower or remove tariffs on American-made cars coming into the country.

"China has agreed to reduce and remove tariffs on cars coming into China from the US," Trump tweeted. "Currently the tariff is 40%."

The move is significant as US-made cars from BMW and others are popular in China. A total of <a href="https://money.cnn.com/2018/04/10/news/economy/china-cars-tariffs/index.html" id="c43c9e5d-1196-335d-a17c-0b71d4b5d41b"> $10.5 billion worth of new and used cars </a> were shipped to China from the US in 2017, according to <a href="https://www.census.gov/foreign-trade/statistics/product/enduse/exports/c5700.html" id="f80a6f72-6bcb-304b-aa4f-8f21b375696e"> the Census Bureau </a> .

The tweet comes the day after <a href="https://www.businessinsider.com/heres-what-trump-and-xi-jinping-ate-at-their-formal-dinner-2018-12?utm_source=intl&amp;utm_medium=ingest" id="65ba738f-7746-3e7e-a69f-44cb2ab2600f"> Trump's dinner </a> with <a href="https://www.businessinsider.com/trump-china-trade-war-xi-jinping-meeting-at-g20-course-2018-11?utm_source=intl&amp;utm_medium=ingest" id="6b3258dd-2dda-311e-adbe-747452ab48e5"> Chinese President Xi Jinping </a> that yielded a deal to freeze the escalation of the US-China trade war and pause the imposition of tariffs between the two countries.

The Trump administration <a href="https://www.businessinsider.com/trump-china-trade-war-tariffs-90-days-2018-12?utm_source=intl&amp;utm_medium=ingest" id="00ff9d3e-aefe-37d6-a2e8-5596e305ecaf"> announced a 90-day détente </a> in the trade war to give the two countries time to negotiate a broader trade deal. This means that the US will not raise the 10% tariff rate on $200 billion worth of Chinese goods to 25% on January 1, as originally scheduled.

China also committed to buying a "very substantial amount of agricultural, energy, (and) industrial" goods from the US.

While the deal is limited in scope, it was a sign of significant progress given the fact that the two countries have barely communicated since the first round of tariffs were imposed in July. A total of $360 billion worth of goods flowing between the two countries are subject to new tariffs imposed this year: $250 billion worth of Chinese goods coming into the US and $110 billion worth of US goods going to China.

Bob Bryan

Articles written by the author

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