President Donald Trump is digging in on his renewed China trade war, warning Monday that the fight "will only get worse" if Beijing retaliates -- just as Chinese officials announced a fresh set of tariffs on $60 billion of US exports.
Trump's saber-rattling came after his top economic adviser spent the weekend trying to defuse the trade war and demonstrate that trade negotiations between the two countries were moving forward . Those attempts to calm markets failed, with stocks falling sharply Monday after the mutual escalation.
The President has sought to spin his decision to increase tariffs on US imports from China as delivering pain to China and benefits to the US, repeatedly suggesting -- falsely -- that China would pay for the US tariff increase. While the tariffs are aimed at delivering economic pain to China, US businesses and consumers will bear the immediate financial cost of the tariff increase.
"There will be nobody left in China to do business with. Very bad for China, very good for USA! But China has taken so advantage of the U.S. for so many years, that they are way ahead (Our Presidents did not do the job)," he wrote in one tweet. "Therefore, China should not retaliate - will only get worse!"
China quickly responded with the announcement that it will be raising tariffs on $60 billion worth of US goods beginning on June 1. That move comes after the Trump administration hiked tariffs from 10% to 25% on $200 billion in Chinese exports last week, while Chinese negotiators were still in Washington, and then proceeded to initiate steps late Friday, after negotiations broke down, to expand tariffs to cover almost everything else China sells to the US.
That list would include consumer goods like smartphones and toys that were left out of earlier tariff rounds, creating a heightened risk of political blowback for Trump. Even the President's chief economic adviser, Larry Kudlow, has conceded that consumers will likely bear the costs of the fresh tariffs.
"Yes, I don't disagree with that," Kudlow said in an interview on Sunday with Fox News, though he insisted that China will "suffer GDP losses" as a result of a diminished export market and shifting US investments. "Both sides will pay."
In a report to investors this week, Goldman Sachs said "the cost of US tariffs have fallen entirely on US businesses and households" and warned that US GDP would take a hit if the trade war continues to escalate.
"Those who think the US has leverage do not fully understand China. China thinks long-term," said Max Baucus, a former senator from Montana and US ambassador to China under President Barack Obama. "To some degree, China feels, 'Oh, well these tariffs will kick in and hurt the American people pretty soon. America is a democracy and their government is going to be forced to respond whereas all of us over in China, we're not a democracy and we can just do what we think we want to do.'"
Trump announced in December that he had made a deal with his Chinese counterpart Xi Jinping at a dinner in Buenos Aires, but talks hit a wall last week after China, according to US officials, reneged on key components of the emerging agreement between the two sides.
The breakdown punctured several weeks of steadily rising optimism that the two sides were nearing a final agreement.
The US' top negotiators in trade talks with China -- Treasury Secretary Steve Mnuchin and US Trade Representative Robert Lighthizer -- met with China's Vice Premier Liu He on Friday, but the talks did little to bring the two sides closer. Instead, officials on both sides signaled that differences between the two sides would ultimately need to be resolved in direct talks between Trump and Xi.
Kudlow said Sunday there is a "strong possibility" Trump will meet with Xi at the G20 economic summit in Japan next month.
Trump, who has often touted his personal relationships with foreign leaders as a way to reach otherwise unlikely deals, addressed Xi directly in one of a series of Monday morning tweets about the trade impasse with China.
"I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don't make a deal because companies will be forced to leave China for other countries," Trump tweeted. "You had a great deal, almost completed, & you backed out!"