Global markets tumbled yesterday after Donald Trump threatened to raise tariffs on all Chinese imports to 25%, putting crunch trade talks between the world’s two largest economies in doubt.
In a series of tweets, the president said the US would more than double tariffs on $200bn (£152bn) of Chinese goods on Friday and would introduce fresh tariffs.
“The tweets wrongfooted investors who had been growing optimistic that a trade deal was on the cards, and ruptured the calm that had descended over global markets since December’s turmoil,” said the Financial Times.
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A 100-person Chinese delegation had been preparing to travel to Washington for negotiations on Wednesday, aimed at ending the year-long trade war.
But the FT says the “aggressive tweets from Trump marked a big shift in rhetoric on the negotiations and raised the possibility that this week’s round could be delayed or cancelled by Beijing”.
Taken by surprise, the Wall Street Journal reported that Beijing was considering cancelling the talks altogether. But while a pared-down delegation is still expected to make the journey, the editor of the influential Chinese state-run Global Times newspaper said the head of China’s negotiating team Vice Premier Liu He Liu was now “very unlikely” to go.
According to the BBC, “in recent days US officials have become frustrated by China seeking to row back on earlier commitments made over a deal”.
Sticking points have included how to enforce a deal, whether and how fast to roll back tariffs already imposed and issues around intellectual property protection.
Tom Orlik, chief economist at Bloomberg Economics, said “it’s possible talks are breaking down, with China offering insufficient concessions, and an increase in tariffs a genuine prospect.”
“More likely, in our view, is that this renewed threat is an attempt to extract a few more minor concessions in the final days of talks” Orlik concluded.
The Daily Telegraph says “Trump wants to keep some, if not all, of the existing tariffs on China as part of any final trade deal to ensure China lives up to its commitments”.
Mindful of his 2020 re-election bid, Trump suggested the measures were not leading to price increases for US consumers. “The Tariffs paid to the USA have had little impact on product cost, mostly borne by China,” he tweeted.
According to Reuters, “tariffs on Chinese goods are actually paid to the United States by companies that import the goods, and most of those companies are US-based. American businesses, while supportive of Trump’s crackdown on China’s trade practices, are eager for the tariffs to be removed, not expanded”.
