WASHINGTON, May 9 (NNN-AGENCIES) — The world’s top two economies on Thursday were due to resume trade talks just as a truce between them verged on collapse, with hostilities poised to escalate after months of seemingly collegial negotiations.
Rather than sealing a deal this week — as officials in both countries had previously hinted was possible — Chinese trade envoy Liu He instead returns to the bargaining table just hours before Washington is due ramp up tariffs on hundreds of billions of dollars in his country’s most valuable exports.
President Donald Trump tweeted Wednesday that Liu still wanted to “make a deal” but late in the day China vowed to retaliate by taking “necessary countermeasures” should Trump persist in more than doubling the tariffs on Friday.
American officials this week accused their Chinese counterparts of retreating from major planks of an agreement they had been working toward since early in the year that aims to resolve Washington’s grievances of industrial theft, massive state intervention in markets and a yawning trade deficit.
Since last year, the two sides 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.
US Trade Representative Robert Lighthizer released an official notice on Wednesday making the tariff increase a virtual fait accompli.
Duty rates on a vast array of Chinese-made electrical equipment, machinery, auto parts and furniture will jump to 25 percent at midnight Thursday, a painful leap up from the 10 percent first imposed last year.
Washington has demanded far-reaching and profound changes to the Chinese economy, such as submitting state enterprises to market principles, reducing massive subsidies and ending the alleged theft of US technology.
Trump suggested Wednesday on Twitter that he would be just as content to strike a deal as to leave punitive import duties in place, believing they generate billions in government revenue.
While US companies complain of lost export markets, disrupted supply chains and higher costs, the trade war has so far not knocked the steam out of the American economy, which continues to see steady growth and hiring amid falling unemployment.
It remained uncertain on Wednesday precisely what offers Beijing may have withdrawn in the talks. Various media accounts indicated the Chinese side had balked at US demands that Beijing codify the seven-chapter agreement in Chinese law and publish the text of the agreement or indeed had sought to weaken most of its core elements.
In a concern for Trump, the tariffs due to rise Friday also have a greater potential to pinch US voters in their wallets as they could increase prices for popular consumer items, according to Mary Lovely, an economist and expert on China trade at Syracuse University.
She also doubted the Chinese side had simply miscalculated the potential American reaction, adding that Liu, the Chinese trade envoy, likely still believed he could offer enough concessions to ensure a deal with the Americans.
“They’re bringing enough gifts to please the Grand Poobah in the White House,” she said. “Otherwise, I don’t think Liu would be coming.” — NNN-AGENCIES