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Chinese delegation still coming to the US for trade talks after Trump tariff threat

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President Donald Trump talks with Chinese President Xi Jinping, with their wives
President Donald Trump talks with Chinese President Xi Jinping, with their wives, first lady Melania Trump and Chinese first lady Peng Liyuan as they pose for photographers before dinner at Mar-a-Lago, Thursday, April 6, 2017, in Palm Beach, Fla. (AP Photo/Alex Brandon)

A Chinese delegation will come to the U.S. this week for trade talks even after President Donald Trump threatened 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 lead this smaller group, an important detail if the team were traveling to Washington with an eye toward closing the 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 at this point whether the talks will still start Wednesday.

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.
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.

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 even 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. That seems unlikely at this stage.

U.S. stock markets initially plunged Monday following Trump’s threat, and slightly 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.

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 contributed to this report.

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