The Big Story 

China has left President Trump twisting in the wind on tariffs, declaring it is not engaged in any negotiation with the U.S. as the tariffs take a political and economic toll on Washington.

© Greg Nash

Trump and the White House insist the U.S. and China are making progress toward a deal, but Chinese officials have shot down those claims and chastised the Trump administration’s approach.

While markets were up on Thursday, the trade war has done economic damage to the U.S. and political damage to Trump.

Two other factors are Beijing’s relative readiness for this fight, and the fact that Washington and Trump are seen as the instigator of the trade war — a fact that could help China stand strong even if high tariffs in the U.S. do hit its economy.

Owen Tedford, senior research analyst at Beacon Policy Advisors, said this means Chinese President Xi Jinping “will also be hesitant to be seen as being pressured into a deal, potentially meaning that Beijing is willing to wait out the US or try to force Trump to act unilaterally.”

Trump insisted that his team is in talks with China after Chinese Commerce Ministry spokesperson He Yadong said any “claims about the progress of China-U.S. trade negotiations are groundless as trying to catch the wind and have no factual basis.”

The Hill’s Alex Gangitano and Sylvan Lane have more here.

Welcome to The Hill’s Business & Economy newsletter, I’m Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.

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Tax Watch 

Trump gives thumbs down to millionaire tax hike

President Trump shot down the idea of hiking the tax rate for people with the highest income levels on Wednesday, shutting the door on a possible pay-for that Republicans had floated for their tax cut and spending package.

The 2017 Trump tax cuts, which Republicans are seeking to extend this year, slashed most income tax levels and brought the top tax rate down to 37 percent from 39.6 percent.

Trump said Wednesday that allowing it to go back up – which would amount to letting the current tax rate expire at the end of this year – would cause millionaires to leave the country.

“I think it would be very disruptive because a lot of the millionaires would leave the country. You know, in the old days they left states. They’d go from one state to the other. Now with transportation so quick and so easy, they leave countries,” Trump said.

Trump has floated a number of tax cuts geared toward working people, and some commentators have remarked that the fact that the GOP was even considering a tax hike for the rich indicates an ongoing shift in the party’s base.

Trump’s additional tax proposals include doing away with taxes on tips and overtime pay, starting a new credit for family caregivers, and deducting auto loan interest payments.

— Tobias Burns

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