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Trump orders tariff hike on remaining Chinese imports

Talks would continue to resolve the row — Beijing

By AFP - May 11,2019 - Last updated at May 11,2019

Members of the Chinese delegation leave the US trade representative offices in Washington, DC, on Friday (AFP photo)

WASHINGTON — US President Donald Trump cranked up the heat in a trade battle with China on Friday, ordering a tariff hike on almost all remaining imports from the world’s second-biggest economy, but Beijing said talks would continue to resolve the row.

After Tweeting that two days of trade talks in Washington had been “candid and constructive”, the businessman-turned-politician changed tack and followed through on a threat he had been making for months.

“The president... ordered us to begin the process of raising tariffs on essentially all remaining imports from China, which are valued at approximately $300 billion,” US Trade Representative Robert Lighthizer said in a statement.

The move came less than 24 hours after Washington increased punitive duties on $200 billion worth of Chinese imports, raising them to 25 per cent from 10 per cent, days after the Trump administration accused Beijing of reneging on its commitments.

Details on the process for public notice and comment will be posted on Monday, ahead of a final decision on the new tariffs, Lighthizer said. They were not expected to go into effect for several months.

China’s top trade negotiator, Vice Premier Liu He, had warned earlier that Beijing “must respond” to any US tariffs.

The developments came as two days of talks to resolve the trade battle ended on Friday with no deal, but no immediate breakdown either, offering a glimmer of hope that Washington and Beijing could find a way to avert damage to the global economy.

“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 [Jinping] 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!”

 

Three disagreements 

 

Liu told reporters the talks had been “productive” and said the two sides would meet again in Beijing at an unspecified date, but he warned that China would make no concessions on “important principles”.

“Negotiations have not broken down, but rather on the contrary, this is only a normal twist in the negotiations between the two countries, it is inevitable,” Liu said.

The seemingly positive messages — coming before the announcement that Trump had ordered the latest round of tariffs — had cheered Wall Street with shares rising after being under pressure all week. 

US Treasury Secretary Steven Mnuchin and 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.

“We have a consensus in lots of areas but to speak frankly there are areas we have differences on, and we believe these concern big principles,” Liu said.

Liu pointed to three major areas of disagreement: whether to cancel all trade war tariffs when an agreement is reached, the exact size of Chinese purchases of US goods, and a “balanced” agreement text.

“Any country needs its own dignity, so the text must be balanced,” Liu said.

Liu and his backer Xi cannot be seen as giving in too much with trade concessions to the US in fear of triggering comparisons to past “unequal treaties” forced on China in the 19th and 20th centuries. 

“Every country has important principles, and we will not make concessions on matters of principle,” Liu said.

 

‘Darkness before dawn’ 

 

Yang Delong, chief economist at First Seafront Fund Management in Shanghai, told AFP that the “sudden hardening” of Trump’s tone is likely linked to the 2020 US presidential election.

“The US hopes China will make greater concessions in many areas, these concessions might harm a foundation of our economic development or impact our institutional reform,” Yang said.

“When it comes to core interests China is not able to yield,” he said.

Washington 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.

In a series of early morning Tweets Friday, Trump said there was “absolutely no need to rush” towards a deal.

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.

Since last year the United States and China have exchanged tariffs on more than $360 billion in two-way trade, weighing on both countries’ economies.

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.

Liu compared the negotiations to a marathon: “when you get to the last stage it is comparatively the hardest stage, now we need to hold on, it is the darkness before dawn.”

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