Trump says he'll not de-escalate trade war

Washington

PRESIDENT Donald Trump is telling advisers and close allies that he has no intention of pulling back on his escalating trade war with China, arguing that clashing with Beijing is highly popular with his political base and will help him win re-election in 2020 regardless of any immediate economic pain.

Administration officials and outside Trump advisers said on Tuesday that they do not expect him to shift his position significantly in coming days, saying he is determined to endure an intensifying showdown with Chinese President Xi Jinping despite turbulence in global markets and frustration within his own party.

Mr Trump's defiance is rooted in decades of viewing the Chinese as economic villains and driven by his desire to fulfil a core promise from his 2016 campaign: that he would dramatically overhaul the US-China relationship. The confrontation is also fuelled by Mr Trump's willingness to flout the norms of presidential behaviour, including his suggestion on Tuesday that the Federal Reserve should assist his trade efforts by lowering interest rates.

"I don't see him crying uncle anytime soon," said Stephen Moore, a conservative economist who withdrew from consideration as a Trump Federal Reserve Board nominee amid an uproar. "It's a high-risk strategy, but it's not in his personality to back down."

Speaking to reporters on Tuesday before boarding Marine One enroute to Louisiana, Mr Trump insisted that he is in a "very, very strong position" and called the stalled negotiations "a little squabble". Mr Trump cast the strength of the US economy as leverage, saying, "We have all the advantage". And he threatened to impose tariffs on US$325 billion in Chinese goods, saying: "We're looking at it very strongly."

But as Mr Trump expresses confidence, there have been tensions inside the White House, with some advisers uneasy with his strident nationalism and firm belief in tariffs as economic weapons.

The disagreements reflect broader distress within Republican circles about the president's sharp rhetoric and refusal to budge. "I don't like directionally where it's going," said former White House communications director Anthony Scaramucci, a prominent investor. "The economy is still very strong. It's not clear to me it will fully derail the economic story. But it could put a dent in the stock and bond markets."

"Tariffs are blunt instruments. They can inflict on competitors and be a source of leverage for negotiations," said former White House staff secretary Rob Porter, who at times engaged in heated discussions with Mr Trump on trade. "They can also have significant consequences for global supply chains and domestic producers and consumers, and any decision on tariffs should include careful consideration of all these consequences."

Mr Trump has worked to contain his current advisers as the negotiations have unfolded and present a united front to the Chinese, who he believes are looking for weakness, according to multiple officials. With Mr Scaramucci, Mr Porter and others who are alarmed now gone from the White House, the president has found it easier to navigate his own administration and govern by his own instincts.

Mr Trump was irritated on Sunday after National Economic Council director Larry Kudlow acknowledged on "Fox News Sunday" that American consumers end up paying for the administration's tariffs on Chinese imports, contradicting Mr Trump's claim that the Chinese foot the bill, officials said. "Trump called Larry, and they had it out," according to one White House official.

Two other officials, however, described the conversation as cordial and said Mr Trump and Mr Kudlow went back and forth on trade, with Mr Trump telling Mr Kudlow several times to "not worry about it." WP