By Jeff Mason and David Lawder
WASHINGTON (Reuters) - U.S. President Trump has made up his mind to impose "pretty significant" tariffs on Chinese goods, an administration official said on Thursday, as Beijing warned that it was ready to respond if Washington chose to ratchet up trade tensions.
Trump is due to unveil revisions to his initial tariff list targeting $50 billion of Chinese goods on Friday. The list will contain 800 product categories, down from 1,300 previously, according to another administration official and an industry source familiar with the list.
Trump no longer believes that Beijing's influence over North Korea is a compelling reason to ease up on trade talks now that his administration has opened up a direct line of communication with the nuclear-armed country, the first administration official said.
U.S. Treasury Secretary Steven Mnuchin argued against imposing the tariffs at a White House meeting on Thursday but he was not expected to prevail, the official said.
The Chinese government's top diplomat, State Councillor Wang Yi, said his country was prepared to respond if Trump went ahead with the tariffs.
Speaking to reporters in Beijing, with U.S. Secretary of State Mike Pompeo at his side, Wang said there were two choices when it came to the trade issue.
"The first choice is cooperation and mutual benefit. The other choice is confrontation and mutual loss. China chooses the first," Wang said. "We hope the U.S. side can also make the same wise choice. Of course, we have also made preparations to respond to the second kind of choice."
The move toward imposing U.S. tariffs on Chinese goods follows negotiations between U.S. and Chinese officials centred on increased purchases by Beijing of American farm and energy commodities and cutting the U.S. trade deficit with China.
Commerce Secretary Wilbur Ross this month met Chinese officials in Beijing and brought back a Chinese proposal to buy around $70 billion worth of additional commodities and manufactured goods. But that offer has not been accepted by Trump, people familiar with the matter said.
Wang said the two countries had agreed to use "constructive means" to handle disagreements.
Pompeo said the U.S. deficit with China was still too high, but that they had good talks.
"I stressed how important it is for President Trump to rectify that situation so that trade becomes more balanced, more reciprocal and more fair, with the opportunity to have American workers be treated fairly," he said.
Pompeo met with Chinese President Xi Jinping later in the evening, and wished Xi a happy birthday for Friday.
Xi told Pompeo he hoped that the United States could "cautiously and appropriately" handle sensitive issues to avoid "major disturbances" to Sino-U.S. ties, the Chinese Foreign Ministry said in a statement.
MOVE COULD COME FRIDAY
The International Monetary Fund warned that Trump's new tariffs threaten to undermine the global trading system, prompt retaliation by other countries and damage the U.S. economy.
It remains unclear when Trump would activate the tariffs, if he decides to do so. Several industry lobbyists told Reuters they expected the move to come as early as Friday, with publication of a Federal Register notice, or it could be put off until next week.
If Washington adopts tariffs, Beijing is expected to hit back with its own duties on U.S. imports, including soybeans, cars, chemicals and planes, according to a list it released in early April.
Under the 1974 trade law that Trump invoked to pursue a tariff investigation into China's intellectual property practices, he could delay the activation by 30 days. He couldn't also delay the tariffs by another 180 days if the U.S. Trade Representative's office finds negotiations with China are yielding progress.
A USTR spokeswoman could not immediately be reached for comment.
In an interview aired on Wednesday, Trump told Fox News he was "very strongly clamping down on trade" with China.
Asked how strong, Trump said: "Well, I think very strongly. I mean you'll see over the next couple of weeks. They understand what we are doing."
Trump did not specifically mention the tariffs and added that he had "a very good relationship with President Xi (Jinping) of China."
The administration's trade hawks, including U.S. Trade Representative Robert Lighthizer and White House trade and manufacturing adviser Peter Navarro, have advocated a tougher approach to address U.S. allegations that China has misappropriated American intellectual property through joint venture requirements, state-backed acquisitions of U.S. technology firms and outright theft.
Amid the rising trade tension, China's Commerce Ministry spokesman Gao Feng said Chinese exporters have been front-loading their shipments due to changes in the international trade environment.
(Additional reporting by David Shepardson in Washington and Michael Martina in Beijing; Writing by Andy Sullivan and Ben Blanchard; editing by Clarence Fernandez, Alison Williams and Leslie Adler)