Chinese Vice Premier Liu He (left) shakes hands with US Trade Representative Robert Lighthizer alongside US Treasury Secretary Steven Mnuchin (center) as Liu leaves the Office of the United States Trade Representative after trade negotiations in Washington, DC, May 10, 2019. Two days of talks to resolve a worrisome US-China trade battle ended Friday with no deal, but no breakdown either, offering a glimmer of hope that Washington and Beijing could find a way to avert damage to the global economy. AFP
WASHINGTON, United States – Two days of talks to resolve a worrisome US-China trade battle ended Friday with no deal, but no breakdown either, offering a glimmer of hope that Washington and Beijing could find a way to avert damage to the global economy.
But the status remains tense after the United States followed through on a threat to ramp up tariffs, and China vowed to retaliate, angering many US businesses and farmers that are feeling the brunt of the impact from the trade war.
President Donald Trump said Friday the talks will continue and a decision on whether to pull back the punitive import duties will depend on what progress is made.
“Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries,” Trump tweeted.
“The relationship between President Xi and myself remains a very strong one, and conversations into the future will continue.”
The tariffs on China “may or may not be removed depending on what happens with respect to future negotiations!”
Chinese Vice Premier Liu He told reporters that the talks had gone “fairly well,” according to Bloomberg.
Just after midnight, Washington pulled the trigger on an increase in punitive duties on $200 billion in Chinese imports, raising them to 25 percent from 10 percent. Beijing responded vowing to take the “necessary countermeasures.”
The renewed hope cheered Wall Street, which had been under pressure all week, and the benchmark Dow Jones Industrial Average recovered from a loss of nearly 350 points to close with a gain of 117 points.
US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer met for about two hours with Liu on Friday and then headed for the White House to brief Trump, who had said he was in no hurry to reach a deal, arguing the United States was negotiating from a position of strength.
From anger to hope
Trump began the standoff because of complaints about unfair Chinese trade practices. The United States is pressing China to change its policies on protections for intellectual property, as well as massive subsidies for state-owned firms, and to reduce the yawning trade deficit.
After weeks of rising optimism about the chances for an agreement, the tone out of the White House has veered from anger to nonchalance.
On May 5, Trump erupted on Twitter, saying the talks were progressing “too slowly,” accusing the Chinese of backing out of commitments and announcing the tariff increase.
But in a series of early morning tweets Friday, he said there was “absolutely no need to rush.”
Bloomberg quoted two sources saying Washington gave Beijing three to four weeks more to reach an agreement before the Trump administration moves to carry out a threat to impose tariffs on all Chinese imports.
The US leader continues to argue 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.
Economists stress that duties are paid by US companies and consumers and result in higher prices, while farmers and manufacturers complain about the loss of markets for their exports due to retaliation from China and other targets of Trump’s trade wrath.
‘No one wins’
“NO ONE WINS A TRADE WAR,” trade analyst Chad Bown of the Peterson Institute for International Economics said on Twitter.
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.
The higher duty rates imposed on Friday will hit a vast array of Chinese-made electrical equipment, machinery, auto parts and furniture, and will apply to goods that left port after midnight Washington time (0400 GMT).
“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.
Oxford Economics estimates the “tariff punch” from all existing duties will cut 0.3 percentage points off US growth and warns recession risks are on the rise. Economists in China estimate a similar impact.
The International Monetary Fund has sounded the alarm that the conflict and the loss of confidence it creates will have a wider impact on the global economy and is a major risk to growth. /cbb