President Trump said Thursday that he was prepared to go ahead with an increase of tariffs slated to take effect Friday on $200 billion worth of Chinese if high-stakes trade talks beginning with a delegation from Beijing turn out to be unsuccessful.

While Mr. Trump said ahead of an initial meeting Thursday afternoon that a trade deal with the Chinese is still possible, he stressed the tariff hike remains an “excellent alternative,” despite the threat of market blowback and rising concern over possible retaliation by Beijing against U.S. goods headed to China.

The prospect of a widening trade war has triggered uncertainty over how global markets will be impacted. Stocks continued to fall Thursday amid uncertainty around the current talks, but did not dip as low as some analysts had predicted. The Dow closed down 0.5%, with the S&P 500 dropping 0.3% on Thursday, although the Dow has gone down more than 650 points and the S&P roughly 2.5% through this week, as of Thursday evening.

Mr. Trump set a midnight deadline to ramp up tariffs on Chinese goods from 10% to 25%, asserting that negotiations have moved “too slowly” after he raised pressure on Beijing to strike a trade deal in Washington earlier this week.

Administration officials have said the tariff hike will hit Chinese building materials, furniture, chemicals, and various consumer electronics. As he headed into talks with Chinese officials Thursday, Mr. Trump claimed a tariff increase will bring in “well over a $100 billion a year” for the United States. “I think it’ll be a very strong day, frankly,” he said. “But we’ll see.”

“I’m different than a lot of people,” the president told reporters. “I happen to think that tariffs for our country are very valuable.” But he also suggested his administration might reverse its decision on tariffs, depending on progress in the negotiations.

Mr. Trump said he had received a “beautiful letter” written by Chinese President Xi Jinping, asserting that the letter expressed optimism and a willingness to strike a deal. “Let’s work together, let’s get something done,” Mr. Trump said.

Chinese officials have said they will retaliate if Washington follows through on the threat of a tariff increase. The Chinese Commerce Ministry said this week that it would impose “necessary countermeasures” and has made “all necessary preparations” in the event of a trade war.

China has already consistently retaliated to earlier U.S. tariff hikes, imposing 25% tariffs on roughly $110 billion of American goods since last summer.

But after months of counter-tariffs imposed by both nations, Mr. Trump and Mr. Xi announced an agreement in December to suspend any further hikes as talks proceed.

After setting a deadline of March 1, Mr. Trump agreed to allow more time while negotiators tried to address a host of issues, including complaints that China gains an advantage over the U.S. by stealing American technology and demanding private companies’ trade secrets.

The Chinese delegation to the current round of negotiations is being led by Vice Premier Liu He and other high-level officials from Beijing, who are slated to meet Friday with Treasury Secretary Steven T. Mnuchin and U.S. Trade Representative Robert E. Lighthizer.

Mr. Trump suggested a deal could be possible. “They’re all here, the vice premier one of the most respected men one of the highest officials in China is coming,” he said Thursday.

Former CIA Director David Petraeus said Thursday that Chinese political leaders “are very concerned” about Mr. Trump’s consistent threats to increase tariffs. “In the short term, the U.S. has enormous leverage,” Mr. Petraeus said in an interview on CNN, but explained that the president will need to “start worrying about what this does to the economy as he approaches his reelection campaign.”

Sen. Lindsey Graham, South Carolina Republican, praised Mr. Trump’s consistent threat to heighten tariffs and said the discussions with negotiators “is the last, best chance for America and the world to get China to play by the rules.”

“When it comes to China, they will never change their behavior until someone stands up to them,” said Mr. Graham. “The time for China to play by the rules is now at hand.”

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