Trump Says U.S. Now Has the Upper Hand on China in Tariff Battle

(Bloomberg) -- President Donald Trump defended his use of tariffs that have inflamed tensions with China and Europe, telling an audience of diehard supporters on Saturday that playing hardball on trade is “my thing.”

“We have really rebuilt China, and it's time that we rebuild our own country now,” Trump said Saturday during about an hour of free-wheeling remarks at a rally outside Columbus, Ohio. He added that Chinese stocks are down, weakening that nation's bargaining power in the escalating trade war.

Trump continued his focus on tariffs Sunday morning, tweeting that the duties are working “big time” and that imported goods should be taxed or made in the U.S. He also suggested duties will allow paying down “large amounts of the $21 Trillion in debt that has been accumulated” while reducing taxes for Americans.

“Every country on earth wants to take wealth out of the U.S., always to our detriment,” Trump tweeted, “I say, as they come, Tax them.”

Trump's tax cuts, passed in late 2017, haven't happened in isolation. The Congressional Budget Office predicts that the cuts, when combined with new federal spending, will push the U.S. budget deficit to $1 trillion in 2020. That's forced the U.S. Treasury to lift note and bond sales to levels last seen in the aftermath of the recession that ended in 2009.

The president also tweeted on Sunday that the news media “purposely cause great division & distrust. They can also cause War! They are very dangerous & sick!”

‘Stronger Than Ever'

Hours before the rally on Saturday night, Trump also posted a string of tweets on the issue, saying the U.S. market is “stronger than ever,” while the Chinese market “has dropped 27% in last 4 months, and they are talking to us.”

It was unclear which measure of Chinese stocks Trump was referring to. The U.S. S&P 500 index, a broad measure of major U.S. companies, has yet to regain highs made in January, just before the escalation of trade tensions initiated by the U.S.

“Tariffs are working far better than anyone ever anticipated” and would make the U.S. “much richer than it is today,” the president tweeted.

At the rally, Trump added that the Europeans are “dying to make a deal.”

Trump went to Lewis Center, Ohio, to stump for Troy Balderson. The Republican state senator is facing an unexpectedly close contest against Democrat Danny O'Connor in an Aug. 7 special election for the congressional seat vacated earlier this year by Representative Pat Tiberi.

Democratic Challenge

In 2016, Trump carried Ohio's 12th House district, but the current House race is rated as a toss-up in a seat Republicans have held for more than three decades. Whether Trump can help Balderson may be seen as another signal of how likely Democrats are to take control of the House of Representatives in November.

In a nod to the Ohio economy, Trump said Saturday on Twitter that tariffs “have had a tremendous impact on our Steel Industry.” The president has said several times in the past two months, without evidence, that U.S. Steel plans to open six or seven new steel mills. He talked about steel at some length during the rally, saying the industry is making “one of the biggest comebacks.”

The Ohio stop was Trump's third political rally in the past week, following stops in Tampa, Florida, and Wilkes-Barre, Pennsylvania. The president is expected to add additional events, one or more per week, through Labor Day.

Demonizing Critics

The events give Trump a chance to frame on his own terms his much-debated moves on trade, foreign policy, media-bashing and interactions with Russian President Vladimir Putin. And that may be a welcome distraction in a week when headlines were dominated by the start of the trial of his one-time campaign chairman Paul Manafort on fraud charges connected to his work for Russians and Ukrainians.

The rallies are also a venue for Trump to demonize high-profile critics whom he believes his political base also resents, including the media, Congressional Democratic leaders, and various celebrities.

On the eve of Saturday's event, Trump took to Twitter to question the intelligence of basketball great LeBron James, who's been critical of the president. James, 33, who left the Cleveland Cavaliers at the end last season to join the Los Angeles Lakers, was in the news this week for using his fortune and fame to launch a school for at-risk youth in his Ohio home town.

Melania's Message

Trump didn't talk about James at the rally, though. Earlier, a spokeswoman for Melania Trump said the first lady was open to visiting James's new school and that the NBA star is “working to do good things.”

This week's trio of rallies also underscores two tests this year's midterm elections present for Trump: whether his enduring popularity with Republicans in swing states he won in 2016 can transfer to down-ballot candidates by driving turnout. And, conversely, whether a backlash to his administration energizes Democratic voters in November.

In the Ohio special election, Balderson's rival, O'Connor, is 31 with little political experience, but has sought to appeal to the center, focusing on economic issues and keeping his distance from the top Democrat in the House, Minority Leader Nancy Pelosi. A similar strategy helped Democratic political newcomer Conor Lamb win a House seat in Pennsylvania in April.

--With assistance from Sahil Kapur.

To contact the reporter on this story: Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Joshua Gallu, Ros Krasny

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