Chinese delegation will come to the US for trade talks after Trump tariff threat

Key Points
  • A Chinese delegation will travel to the United States for trade talks this week after President Donald Trump's latest tariff threat, according to sources familiar with the matter.
  • Trump reignites the trade war with Beijing on Sunday, raising doubts about whether the Chinese team will come to Washington to try to strike a trade deal as planned.
  • Stock markets initially plunge following Trump's tariff threat but recover throughout Monday.
Chinese delegation will still visit the US this week: Sources
Chinese delegation will still visit the US this week: Sources

A Chinese delegation will come to the U.S. this week for trade talks after President Donald Trump upended negotiations by threatening new tariffs on Sunday, according to sources familiar with the matter.

One of the sources briefed on the status of talks said the Chinese would send a smaller delegation than the 100-person group originally planned. It is unclear whether Vice Premier Liu He would still helm this smaller group, an important detail if the team were traveling to Washington with an eye toward sealing a deal. Two senior administration officials described Liu as "the closer," since he had been given authority to negotiate on President Xi Jinping's behalf.

The team from Beijing was set to start talks with American negotiators on Wednesday as the world's two largest economies push for a trade agreement. It is unclear whether the talks will still start Wednesday.

The White House, Treasury Department and Office of the U.S. Trade Representative did not immediately respond to requests to comment.

China's President Xi Jinping (C) sits with members of the Chinese delegation during a bilateral meeting with U.S. President Donald Trump (Not Pictured) at Trump's Mar-a-Lago estate in Palm Beach, Florida, April 7, 2017.
Carlos Barria | Reuters

Trump said Sunday that he would increase tariffs on $200 billion in Chinese products to 25% from 10% on Friday. He added that he would "shortly" put duties on the $325 billion in Chinese goods currently not subject to tariffs.

By reigniting a dormant trade war, Trump raised doubts about whether the Chinese delegation would participate in talks as planned. As of last week, the U.S. side had expressed optimism about announcing a deal as soon as this week.

But in threatening new tariffs, Trump said the trade deal with China had moved along "too slowly" as "they attempt to renegotiate."

U.S. stock markets initially plunged Monday following Trump's threat, but recovered throughout the day. Equities gained back some more of their losses following the report that the Chinese delegation still planned to come to Washington.

"It's putting a bid under the market. They're feeling a bit better," said Art Cashin, director of floor operations at the New York Stock Exchange for UBS. "It is a reduced party. There was going to be over 100. But the fact they're coming is important."

Whether Liu joins the talks is seen as particularly important. If he does not attend, it will "raise the likelihood of the 25% tariff hike being implemented by the U.S." on Friday, a team of Barclays economists wrote in a note Monday.

— CNBC's Patti Domm contributed to this report.

Subscribe to CNBC on YouTube.