Thursday, 19th May 2022
Breaking News:

Trump says ‘no rush’ for China trade deal after US hikes tariffs

President Donald Trump said Friday he was in no hurry to reach a deal with Beijing as high-stakes trade talks resumed, arguing the US was negotiating from a position of strength.

President Donald Trump said Friday he was in no hurry to reach a deal with Beijing as high-stakes trade talks resumed, arguing the US was negotiating from a position of strength.

Just hours earlier, the United States had increased punitive duties on $200 billion in Chinese imports from 10 to 25 percent, which Beijing said it “deeply regrets,” vowing to take the “necessary countermeasures.”

Chinese Vice Premier Liu He waved to the assembled news media on Friday morning as he climbed the steps at US Trade Representative Robert Lighthizer’s office to return to the bargaining table.

But the sudden flare-up in hostilities has dimmed market hopes of a quick resolution. Under pressure all week, Wall Street continued to slide on Friday morning.

“Talks with China continue in a very congenial manner — there is absolutely no need to rush — as Tariffs are NOW being paid to the United States by China,” Trump tweeted.

Ramping up the pressure on China in a series of early morning tweets, the US leader argued that tariffs could in some ways be preferable to reaching a trade deal.

“Tariffs will bring in FAR MORE wealth to our country than even a phenomenal deal of the traditional kind,” Trump wrote.

Since last year, the United States and China have exchanged tariffs on more than $360 billion in two-way trade, gutting US agricultural exports to China and weighing on both countries’ manufacturing sectors.

Trump began the standoff because of complaints about unfair Chinese trade practices.

Lighthizer and Mnuchin met the Chinese delegation for about 90 minutes Thursday evening and they had a working dinner with Liu.

Weighing in ahead of the resumption of talks on Friday, Commerce Secretary Wilbur Ross said that “we will be happy if we could have an agreement with China,” but it “remains to be seen if that can be done.”

‘Can’t do that’
Despite optimism from officials in recent weeks that the talks were moving toward a deal, tensions reignited this week after Trump angrily accused China of trying to backpedal on its commitments.

“They took many, many parts of that deal and they renegotiated. You can’t do that,” Trump said Thursday.

Michael Taylor, a managing director for Moody’s Investors Service, said the tariff hike “further raises tensions” between the two countries.

“While we believe that a trade deal will eventually be reached between the US and China, the risk of a complete breakdown in trade talks has certainly increased,” Taylor said.

The renewed tensions roiled global stock markets this week and unnerved exporters, though Chinese shares led gains across most Asian and European markets on Friday.

Liu had said Thursday on his arrival in Washington that the prospects for the talks were “promising,” but warned raising tariffs would be “harmful to both sides.”

“I hope to engage in rational and candid exchanges with the US side,” he told Chinese state media.

The higher duty rates imposed on Friday will hit a vast array of Chinese-made electrical equipment, machinery, auto parts and furniture.

But due to a quirk in their implementation, products already on ships headed for US ports before midnight will only pay the 10 percent rate.

That could effectively provide a grace period for the sides to avert an even more serious escalation.

“While we are disappointed that the stakes have been raised, we nevertheless support the ongoing effort by both sides to reach agreement on a strong, enforceable deal that resolves the fundamental, structural issues our members have long faced in China,” said business lobby the American Chamber of Commerce in China.

The US is pressing China to change its policies on protections for intellectual property, massive subsidies for state-owned firms, and to reduce the yawning trade deficit.

Derek Scissors, a China expert at the American Enterprise Institute, said the two sides had clashed over how much of the final trade agreement should be enshrined in a public document, something Beijing has long resisted.

“What the Chinese step-back primarily says is they don’t want to publicly acknowledge that their existing laws, especially on IP, are flawed,” he told AFP.

Washington is counting on the strong US economy to be able to withstand the impact of higher costs from the import duties and retaliation better than China, which has seen its growth slow.

A Chinese central bank advisor told state-run Financial News that Trump’s tariff hike and Chinese retaliation would lower economic growth by 0.3 percentage points.

It is “within a controllable range,” the advisor Ma Jun said.

In this article