Tuesday, September 25,2018
China canceled trade talks with the US and will no longer send Vice-Premier Liu He to Washington next week, the Wall Street Journal reported, citing unidentified people briefed on the matter.
A mid-level delegation from China had been due to travel to the US capital to pave the way for Liu’s trip, and that visit has been scrapped as well, according to the newspaper’s website. Beijing is leaving open the possibility of holding fresh negotiations next month, it said, Bloomberg reported.
In his push for what he calls a level playing field in dealing with China, President Donald Trump slapped tariffs on $200 billion worth of imports and threatened more if Beijing retaliated. On Tuesday, China said it would impose levies on $60 billion worth of US goods effective Sept. 24.
The new tariffs brought “new uncertainties” to China-US negotiations, Gao Feng, a spokesman of China’s Ministry of Commerce said, when answering a question at a press conference on Thursday on whether the countries would have a new round of trade talks.
Earlier, the Trump administration said it needs to confront China over its trading practices to defend US long-term interests even as the escalation risks causing pain for American consumers. Inaction would leave the US economy and consumers worse off over the longer run, a senior administration official told reporters on Friday, speaking on the condition of anonymity.
US industry has widely pushed back against the Trump administration’s use of tariffs to force changes to China’s economy, and companies from Walmart Inc. to Gap Inc. and Samsonite International SA have said they’re prepared to raise prices if the new tariffs bite into their business.
Trump’s biggest strike yet in a growing trade fight between the world’s biggest economies will see a 10% duty applied to $200 billion of Chinese imports on Monday, which could rise to 25% next year. He’s threatened duties on a further $267 billion of made-in-China goods, which would hit almost all other consumer products including mobile phones, shoes and clothes.
The latest round of duties comes on top of a 25% tariff already imposed on about $50 billion in Chinese goods, which spurred counter-tariffs from Beijing.
Trade War Hurting
Trump continued to hit out at China late last week, signaling the trade war won’t end any time soon. “It’s time to take a stand on China,” he said in an interview Thursday with Fox News. ”We have no choice. It’s been a long time. They’re hurting us.”
“The new US tariffs on Chinese goods, mostly consumer-oriented, will depress spending and hurt the retail sector beginning in 2019,” Seema Shah and Danielle McIntee, analysts with Bloomberg Intelligence, wrote in a note on Friday. “Lower-income families, already pinching pennies, are most exposed, given the likelihood of tariff-related price increases on everyday items.”
Commerce Secretary Wilbur Ross earlier this week said the tariffs are spread over such a wide range of goods that Americans shouldn’t notice price increases.
“We were trying to do things that were least intrusive on the consumer,” Ross said on CNBC on Tuesday. “We really went item-by-item trying to figure out what would accomplish the punitive purpose on China and yet with the least disruption in the US.”
Economic Cold War
The last several months of tit-for-tat tariffs between the US and China may only be the beginning of a prolonged economic conflict. Stock markets in both countries have climbed this week despite fresh tariff announcements, CNBC reported.
Analysts said the duties were not as severe as traders expected, and there is still hope of reconciliation. But reality may prove otherwise as the world’s two largest economies, each coming from a vastly different culture, pursue their own development.
“Now we need to think about whether this current trade war will turn into an economic cold war. We hope it doesn’t,” said Jing Ulrich, managing director and vice chairman of Asia Pacific at JP Morgan Chase.
“There is still a chance that two sides may come to the negotiation table,” she said Thursday, during a panel discussion at the World Economic Forum conference in Tianjin. “And there is still a chance that some sort of reconciliation may be reached—and we all know if the trade war goes on, it is going to be a lose-lose situation. No one in the world will be benefiting.”