US-China trade talks break up without agreement
The Trump administration has hiked tariffs on 200 billion dollars (£155 billion) worth of Chinese imports to 25% from 10%.
Trade talks between the US and China have broken up without agreement after President Donald Trump said there was “no need to rush” to get a deal between the world’s two biggest economies.
Hours earlier, the Trump administration hiked tariffs on 200 billion dollars (£155 billion) worth of Chinese imports to 25% from 10%, escalating tensions between Beijing and Washington.
Mr Trump said the two sides had held “candid and constructive conversations on the status of the trade relationship” and those conversations would continue in the future.
Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries. The relationship between President Xi and myself remains a very strong one, and conversations....— Donald J. Trump (@realDonaldTrump) May 10, 2019
China’s Commerce Ministry said it would impose “necessary countermeasures” but gave no details.
The increase went ahead even after American and Chinese negotiators briefly met in Washington on Thursday and again on Friday, seeking to end a dispute that has disrupted billions of dollars in trade and shaken global financial markets.
After a short session on Friday, the lead Chinese negotiator, Vice Premier Liu He, left the Office of the US Trade Representative at about midday.
Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin shook hands with Mr Liu as he left.
Reporters at the scene sent out tweets quoting Mr Mnuchin as saying the two countries had held “constructive discussions”.
Hu Xijin, editor-in-chief of Chinese newspaper Global Times, tweeted that “talks didn’t break down. Both sides think that the talks are constructive and will continue consultations. The two sides agree to meet again in Beijing in the future.”
Still, the Trump administration escalated the confrontation again after the Chinese delegation left town.
Mr Lighthizer announced on Friday evening that he was preparing to impose tariffs on the 300 billion dollars (£230 billion) in Chinese imports that have not already been targeted.
The government will have to get public comment before it can target more Chinese goods.
On Wall Street, stocks fell initially on Friday but regained lost ground on optimism over future talks.
Earlier, Mr Trump asserted in a tweet that his tariffs “will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do”.
Tariffs will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do. Our Farmers will do better, faster, and starving nations can now be helped. Waivers on some products will be granted, or go to new source!— Donald J. Trump (@realDonaldTrump) May 10, 2019
In fact, tariffs are taxes paid by US importers and often passed along to consumers and companies that rely on imported components.
American officials accuse Beijing of backtracking on commitments made in earlier rounds of negotiations. “China deeply regrets that it will have to take necessary countermeasures,” said a Commerce Ministry statement.
US business groups appealed for a settlement that will resolve chronic complaints about Chinese market barriers, subsidies to state companies and a regulatory system they say is rigged against foreign companies.
The latest increase extends 25% duties to a total of 250 billion dollars (£192 billion) of Chinese imports, including 50 billion dollars worth that were already taxed at 25% before the new hike. Mr Trump said on Sunday he might expand penalties to all Chinese goods shipped to the United States.
Beijing retaliated for previous tariff hikes by raising duties on 110 billion dollars of American imports. But regulators are running out of US goods for penalties due to the lopsided trade balance.
Ford spokeswoman Rachel McCleery said the car maker is most concerned about any retaliatory tariffs China might impose.
The Michigan-based company says 80% of the vehicles it assembles in the US are sold domestically but it does export some vehicles to China.
“While most of the vehicles we sell in China are built in China, Ford does export a number of vehicles to China from the US,” Ms McCleery said. “Our biggest concerns are impacts retaliatory tariffs would have on our exports and our expanding customer base in China.”
Chinese officials have targeted operations of American companies in China by slowing customs clearance for them and stepping up regulatory scrutiny that can hamper operations.
The latest US increase might hit American consumers harder, said Jake Parker, vice president of the US-China Business Council. He said the earlier 10% increase was absorbed by companies and offset by a weakening of the Chinese currency’s exchange rate.
A 25% hike “needs to be passed on to the consumer,” Mr Parker said. “It is just too big to dilute with those other factors.”
Despite the public acrimony, local Chinese officials who want to attract American investment have tried to reassure companies there is “minimal retaliation”, he said. “We’ve actually seen an increased sensitivity to US companies at the local level,” he added.