Talks to resolve a trade conflict between the world’s two largest economies hit an impasse on Sunday.
China to the US: back off on tariffs, or else
Chinese and American negotiators made little progress at the end of two days of meetings in Beijing over the weekend, with China threatening to cancel any agreement they had reached, if the US hits it with more trade measures.
“If the US side introduces trade sanctions, including additional tariffs, all the economic and trade outcomes negotiated by the two parties will not take effect,” China said in a statement published by the state-run Xinhua news agency.
One of these outcomes is China’s agreement to buy more American products to help shrink the US trade deficit with China, a deal that would help President Donald Trump fulfill one of his key campaign promises.
The ball is now back in Trump’s court.
The White House had gone ahead last week with announcing a plan to impose heavy tariffs on $50 billion worth of Chinese goods, promising to announce a full list of affected items by June 15 and swift execution of the tariffs thereafter.
The tariffs took aim at China’s ambitious “Made in 2025” plan that would help the country dominate several advanced technologies by 2025.
Beijing now wants Washington’s assurance that it won’t go ahead with the tariff threats, the Wall Street Journal reported.
For the US, what’s immediately on the line are the farmers and agricultural states who stood to benefit from China’s agreement to specifically buy more American agriculture.
Before China offered the concession, it had threatened to impose tariffs that would particularly affect those farmers and hit Trump where it hurts.
Complicating Trump’s efforts to extract trade concessions from China, his administration said Thursday that it would impose steep tariffs on several imported metals from its allies.
“China understands rightly that it has a stronger position in its trade negotiations with US if the latter stands alone, with no allies,” said Jorge Guajardo, a former Mexican Ambassador to China, on Twitter.
“No pressure on China to cede if they know the world is about to enter a trade war with the US.”
One of the affected allies, Canada, responded with unusually harsh words and a promise to respond to the tariffs in kind, dollar-to-dollar.
American tariffs on Canadian aluminum & steel are unacceptable. As we have said, we will always stand up for our workers, and today we’re announcing retaliatory measures to this attack on our industry.— Justin Trudeau (@JustinTrudeau) May 31, 2018