The United States is set to ramp up the pressure on China if a trade deal is not agreed soon, a key White House adviser said, adding that Washington has so far imposed only “low level tariffs” on the Asian giant.

Described by US President Donald Trump as “the leading authority on China”, Michael Pillsbury said in an interview in Hong Kong on Thursday that Trump had been “remarkably restrained in the pressure he has brought to bear on China in the trade field”.

“Does the president have options to escalate the trade war? Yes, the tariffs can be raised higher. These are low level tariffs that could go to 50 per cent or 100 per cent,” he said, adding that Trump’s critics were wrong to assume the president was “just bluffing” when he threatened an all-out trade war.

“There are other options involving the financial markets, Wall Street, you know, the president has a whole range of options,” he said.

Pillsbury’s profile has risen during Trump’s presidency, with his book – The Hundred-Year Marathon, which advocates a harder line on China – becoming required reading among Washington politicos.

The book claims that Beijing has a century-long plan to usurp the US as the world’s dominant superpower through various tactics, including technology theft.

Pillsbury, the American director of the Centre on Chinese Strategy at the Hudson Institute in Washington, is known to speak to Trump regularly on China issues, but has said repeatedly that the president’s “most important adviser on China is himself”.

“I believe President Trump uses social media, especially on China, to convey his thinking. So I reject the idea that I or anyone else is some kind of adviser to him on China,” he said.

“His focus is revealed frequently in the tweets that I think everybody should take very seriously as presidential statements.”

I believe President Trump uses social media, especially on China, to convey his thinking. So I reject the idea that I or anyone else is some kind of adviser to him on China

Michael Pillsbury

In recent months, Trump’s Twitter feed has promoted an escalating volume of negative news on China’s economy as evidence that his trade tariffs are working.

He has commented on the exodus of manufacturers from China to avoid US tariffs, deflation among Chinese factories, job losses related to tariffs, and even “ordered” US firms “to immediately start looking for an alternative to China”.

Despite those comments, Pillsbury said Trump was not seeking to cripple US-China trade, instead positing that he wanted to “increase the level of trade to rectify the deficit”.

Trump was not pursuing “cold war 2.0” or “containment”, he said, while a much discussed potential decoupling of the world’s two largest economies would be “a consequence of no agreement by China”.

Nor would Trump “instigate demonstrators in Hong Kong”, Pillsbury said when asked if the ongoing protests might become a factor in the trade talks.
“We will see this ‘black hand’ theory proven wrong,” he said in reference to Beijing’s claim that foreign agents, particularly those from the US, were supporting the protesters.

Pillsbury blamed China for the trade talks in May stalling, when many believed an agreement was imminent. Beijing torpedoed proceedings when it faxed through a heavily redacted version of a 150-page deal, negotiated over a dozen rounds of meetings and more than a year.

“It was very close and then something mysterious happened. China reneged,” Pillsbury said. “The mystery is the hardliners [in Beijing]. They apparently were not aware of the 150-page deal. They somehow became aware of it in April. Some new players got involved in Beijing and next thing we know their reneging took place.”

However, should China go back to the original draft text and use it as a template for talks, “we are headed for a really big success”.

The mystery is the hardliners [in Beijing]. They apparently were not aware of the 150-page deal

Michael Pillsbury

Top trade officials from the two sides are due to resume their negotiations in Washington next month, while lower level discussions to prepare the groundwork for the meetings got under way this week.

Speculation is rife that a so-called mini-deal will be agreed, whereby the US agrees to postpone tariffs due to take effect on October 15 and December 15, and in exchange China agrees to mass purchases of US farm products.

Pillsbury dismissed the view that the sort of deal in which agricultural goods and national security issues, such as Huawei’s access to US supplies, appeared to be conflated was “transactional”. Critics of China – including Pillsbury in his bestselling book – have long called for structural changes to the way its economy works.

A deal that stopped short of such reforms was likely to face criticism in Washington, but that sort of censure was “the language of the president’s enemies” and “fake news”, Pillsbury said, adding that such critics “feed on super hawks like Steve Bannon”, who “does not understand much about China”.

If a major deal was to be achieved it would be via a face-to-face summit between Trump and Chinese President Xi Jinping, who had spoken “nearly 30 times on the phone, often an hour each”, Pillsbury said.

Throughout the interview, Pillsbury – who has advised the White House on Chinese affairs since the presidency of Richard Nixon – repeatedly praised Trump’s handling of the trade war and the “personal relationship” he had cultivated with Xi.

Asked whether Trump might have jeopardised that connection when he asked his 64 million Twitter followers, “who is our bigger enemy?” – in reference to Xi and Federal Reserve chairman Jerome Powell – Pillsbury said the president was “joking about the level of damage to the economy” that each man was perceived to have inflicted.