— The Trump administration announced the start of the process for imposing tariffs on all remaining imports from China, setting up a high-stakes meeting between President Donald Trump and Chinese President Xi Jinping in late June.
— GOP senators may hate Trump’s new China tariffs, but there’s no appetite to take on the president after efforts to get rid of steel and aluminum tariffs hit a wall.
— Efforts to renegotiate a duty suspension agreement on imports of Mexican tomatoes hit a snag after Mexican growers said the latest offer from the Commerce Department contained several “unlawful” demands.
USTR LISTS CHINESE GOODS THAT COULD FACE NEW TARIFFS: Trump has yet to decide whether to slap tariffs on the rest of China’s imports, totaling roughly $300 billion, but the administration is giving a peek at what it will target if it follows through on a new 25 percent tariff.
The latest tariff list, which includes tech products like cellphones and agricultural goods, sets out a notice and comment deadline that could set up a final decision shortly after Trump meets with Xi at the G-20 summit in Japan from June 28-29. Some items dropped from previous lists as a result of the public comment period are now subject to potential tariffs again. But any item that has been granted a one-year exclusion by USTR retains that status, a USTR official said.
China counters tariff hike: On Monday, China said it would increase tariffs starting June 1 on approximately $60 billion worth of American goods in response to the U.S. increasing tariffs on $200 billion worth of goods from 10 percent to 25 percent. Doug has more here.
Michael Pillsbury, an outside adviser to Trump on China, said the Chinese response was restrained and indicated a willingness to let the process play out in the coming weeks.
“Both sides need to recalculate the relative pain they will suffer,” he told Morning Trade. “The bottom line for both Xi and Trump are the economic growth rates they need to deliver to their respective bases.”
But there are some signs that talks may only get harder. Pillsbury said it was telling that Vice Premier Liu He lost his status as “special envoy” for Xi and that China told the American side not to use the title anymore in press guidance. That could mean the internal struggle in China is intensifying over a possible deal that hardliners had thought gave too much ground to the U.S.
“That suggested to me it’s not Xi Jinping personally in charge of this,” Pillsbury said. “He must have some kind of working group or task force and therefore it’s not Xi Jinping who sits alone.”
Watch for more retaliation: “We should expect China this week to signal its intention to retaliate in kind and potentially other means, the most likely being harassment of American companies’ China operations,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies.
Although China’s retaliatory response on Monday was proportionate, “the explanation to its domestic audience was couched in quite strong language emphasizing the righteousness of China to defend its sovereignty and its system,” said Kennedy, who is in Beijing this week.