Trump plans to delay tariffs in frantic trade war with China as 'goodwill gesture' after months of talks fail to cool tensions

Trump's furious trade war against China hurtles further down road to nowhere as sides reach deadlock

Ana Swanson
Thursday 12 September 2019 10:54 BST
Trump claims trade talks with China protecting Hong Kong protesters from worse violence

Donald Trump said on Wednesday night that the United States would delay its next planned tariff increase on China by two weeks, as “a gesture of goodwill” that may help to mend the seriously damaged ties between the world’s two biggest economies.

The United States would delay a planned increase in its 25 per cent tariff on $250 billion (£200bn) of Chinese goods from 1 October 1 to 15 October, a move that was made “at the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary on October 1st,” the US president said in a tweet.

The move comes as trade talks between the United States and China have stagnated, leading to stock market volatility and consternation among businesses that have paid higher prices to import and export goods.

Despite months of talks, negotiators still appear far from a comprehensive trade deal that would resolve the Trump administration’s concerns about Chinese economic practices, including its infringement on US intellectual property.

The president’s announcement will delay talks by only two weeks. But it could allow negotiators to meet before the next round of tariffs, raising the potential for that increase to be averted.

The two sides were on the cusp of a trade deal this spring, when Chinese leaders decided that some US demands to change their laws infringed too much on Chinese sovereignty.

Since then, Trump has moved ahead with taxing an additional $112 billion (£90bn) of Chinese products, and he was expected to raise tariffs even further on October 1. China imposed additional tariffs on $75 billion (£60bn) worth of US goods in retaliation.

Tensions between the two sides have eased slightly in recent weeks, with Chinese officials agreeing to travel to the United States in October for the next round of talks.

On Wednesday, China published a short list of US products that would be exempt from its new tariffs, and said it would announce more exemptions in coming weeks.

The exemptions included cancer drugs and certain chemicals that China does not produce domestically, but it did not include US exports like pork and soybeans, which have been targeted by Beijing as punishment for Trump’s tariffs.

In remarks in the Oval Office Wednesday, Trump greeted the exemptions as a sign that China would soon compromise, saying that the trade war “was only going to get worse” and “they want to make a deal.

“They took tariffs off, certain types,” he said. “I think it was a gesture. It was a big move. People were shocked. I wasn’t shocked.”

On other fronts, the Trump administration continues to move ahead with more stringent treatment of China.

The administration has drafted an executive order that would increase inspections of mailed packages, in an effort to crack down on shipments of counterfeit goods and deadly drugs from foreign nations including China.

Trump insists there's been communication at the 'highest level' after China denies claims they called US officials to restart talks

The order would empower the US Postal Service to increase inspections of small packages that arrive in the country by air, according to several people familiar with the draft, who declined to be named because they were not authorised to speak publicly.

That would help to close a loophole that has allowed dangerous drugs like the opioid fentanyl and other contraband to pass into the United States unchecked.

The measure is not aimed specifically at China. But Trump has often accused China of failing to stop shipments of fentanyl from flowing into the United States.

Trump said late last month that he was directing the Postal Service and private US companies like FedEx, Amazon and UPS to search packages from China for fentanyl and refuse delivery.

On 1 September, Trump placed more tariffs on Chinese imports as punishment for Beijing’s failure to stop fentanyl shipments and its refusal to buy more agricultural goods from the United States.

“Fentanyl kills 100,000 Americans a year. President Xi said this would stop – it didn’t,” Trump said in a tweet last month, referring to Xi Jinping, China’s president.

The executive order would apply solely to the Postal Service, not private companies like FedEx or UPS.

The order is drafted to apply to all countries, though the effects would fall most heavily on China, a major source of both counterfeit products and fentanyl as well as small packages shipped into the United States.

Regarding the trade talks, China and the United States appear to still have substantive differences. Chinese officials have emphasised recent changes they have made to laws governing foreign investment and intellectual property, rather than discussing the more significant changes the Trump administration has demanded.

Trump has ordered US companies out of China and expressed satisfaction at the damage his tariffs are wreaking on its economy.

Business leaders said they are already struggling under the tariffs, and predict lower profits and wage cuts if further levies – more are set for December – go into place.

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A poll by the American Chamber of Commerce in Shanghai published Wednesday said the trade war was weighing on its members’ projections for revenue growth, optimism about the future and future investment plans.

Moody’s Analytics estimates that the trade war has already cost 300,000 US jobs, a toll that could increase to nearly 450,000 by the end of this year and nearly 900,000 jobs by the end of next year, assuming Trump’s planned tariff increases go into effect.

In recent months, some of the focus has shifted away from the terms of the trade deal itself to whether there can be an interim agreement that would involve Chinese purchases of US agricultural products and smooth over relations between the countries.

Chinese officials and their contacts have floated the idea of restarting agricultural purchases, in return for the United States postponing further tariff increases and offering some relief for Huawei, the Chinese telecom giant that has been blacklisted from buying US products, several people familiar with the matter said.

The New York Times

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