(CNN) - American and Chinese negotiators completed another round of trade talks Friday morning after a last-minute effort to stave off new tariffs on Chinese goods failed to yield a breakthrough.
Without a compromise, tariffs increased on $200 billion worth of Chinese exports at midnight. There was scant optimism within the administration that the continued talks on Friday would result in the tariffs being rolled back, and President Donald Trump boasted on Twitter the new moves would benefit the United States.
"Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch!" he wrote. "In the meantime, China should not renegotiate deals with the U.S. at the last minute."
In allowing the new tariffs to take effect, Trump is discarding warnings from businesses and Republican allies that new tariffs could threaten American economic growth — the same growth he's relying upon to fuel his upcoming reelection bid.
On Friday evening, US officials said they had begun the process of adding tariffs on "essentially all remaining imports from China" -- another $300 billion in goods that would include consumer items left out of the first round, like electronics and toys.
A day earlier, the President signaled no qualms at the move, which has worried businesses and investors. Instead, he said he was willing to go even further, threatening to slap tariffs on nearly all Chinese goods. And he signaled Friday he would use his hardline negotiating stance as a political talking point, claiming on Twitter that potential Democratic rivals would have crumpled in a similar situation.
The Thursday evening talks between Chinese negotiators led by Vice Premier Liu He and a US team led by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin did not bridge the major differences that have recently emerged between the two sides. The teams met for roughly 90 minutes, followed by a dinner at a private club near the White House.
The White House said Mnuchin and Lighthizer briefed Trump on the talks in the hours before the tariffs went into effect.
Even a week ago, top administration officials appeared bullish on the chances a deal would soon be struck with China. But backtracking by the Chinese and an emboldened Trump have dampened the optimism, and on Wednesday and Thursday the President had already seemed to write off the chances of a breakthrough.
Dow futures were pointing to a lower open on Friday after the US introduced additional tariffs on Chinese imports. Still, investors appeared confident a deal could eventually be struck and global stocks bounced back from their earlier losses in the week. Asian stocks closed higher, with the Shanghai Composite Index finishing up 3.1%.
US officials took it as a good sign that talks with the Chinese continued for a second day. While the talks with Liu were not tense, they also did not inspire confidence that an agreement would be reached when the delegations reconvened at 9 a.m. ET.
Those talks proceeded for roughly two hours before the delegations departed separately.
US officials are pinning blame for the breakdown on Chinese President Xi Jinping, who they claim lost the political will to make the economic reforms the US is insisting upon as part of the deal. In talks Thursday night, Liu essentially told his counterparts the two leaders would need to work these differences out themselves, saying he could only go as far as Beijing will allow, according to a person familiar with the discussions.
Officials said there is currently no call scheduled between Trump and Xi, though Trump himself said on Thursday he would likely speak by phone to Xi about the trade matter soon.
Progress toward a deal was derailed last week following a round of talks in Beijing. While US officials departed the Chinese capital confident, they were later surprised by new Chinese demands the US characterized as backtracking on agreed-to commitments.
That included promises by China to codify into law changes to certain economic practices -- an aspect of the deal US officials had believed was settled, but which Chinese officials objected to.
Trump, who has called Xi a close friend, said Thursday he'd received a letter from his counterpart advocating for continued talks.
"Let's work together, let's see if we can get something done," Trump said of Xi's message.
In the letter to Trump, Xi expressed optimism a deal could be struck — but emphasized there must be equal concessions on both sides, according to a person familiar with the document. US officials have interpreted that to mean a lifting of tariffs, something Trump has said he won't do.
Administration officials said they expect the Chinese to respond to the tariff increase that went into effect at midnight in the coming days.
"In the meantime we will continue to negotiate with China in the hopes that they do not again try to redo deal!" Trump tweeted Friday morning, noting that the talks had been "congenial." He added that there is "absolutely no need to rush."
In addition to what his aides have said privately, Trump is also signaling that a deal isn't likely to emerge from this round of talks.
He tweeted, "Tariffs will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do."
While US officials believe they have the upper hand — believing the US economy to be stronger than China's — squeezing China with tariffs is not a sustainable long term policy, one official conceded.
There were no set plans for Trump to meet with Liu when he's in Washington this week, according to US officials. Trump has met with Liu during his past visits to Washington as the two sides appeared to be getting closer to an agreement. But with both sides hardening in their negotiating stance, the White House decided this week that talks should not include Trump this time.
Still, that could change if this week's discussions prove fruitful. If Trump does meet with Liu, it would be a sign that talks are making progress, officials said. The decision would likely be made at the last minute.
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