Chinese officials expect the U.S. will delay a threatened tariff increase set for Sunday as both sides focus on de-escalating tensions by cutting import taxes currently in place rather than removing specific products from the target list, according to people familiar with the matter.
Beijing sees the removal of the Dec. 15 threat enabling talks to continue on the unfinished items in phase-one of the accord, two officials said on condition on anonymity because the conversations are private. While the Trump administration has yet to announce any postponement, Agriculture Secretary Sonny Perdue said yesterday [Macau time] that he believed there will be “some backing away.”
Reducing the existing tariff rates will enable negotiators to avoid having to choose which among thousands of goods can receive relief. The U.S. has added a 25% duty on about $250 billion of Chinese products and a 15% levy on another $110 billion of its imports over the course of a 20-month trade war.
The ongoing discussions illustrate the difficulties in reaching an accord that President Donald Trump said more than eight weeks ago was basically done and would take three to five weeks to put on paper. Stock futures reversed losses on news of the potential delay.
U.S. Commerce Secretary Wilbur Ross, speaking yesterday on Fox Business Network, said getting the right deal is more important than whether it comes before or after Dec. 15. “Every day that goes by, we are in a better negotiating position,” he said, adding that most of the tougher issues will be addressed in later phases of negotiations.
Adding to the tough timeline for the phase-one deal by Sunday is U.S. Trade Representative Robert Lighthizer’s attention this week on getting enough support in Congress to ratify the administration’s revamped free-trade agreement with Mexico and Canada.
A tariff reprieve would lift confidence in the global economy and signal that the two sides are determined to push through a deal, despite heightened tension in the past two weeks over non-trade conflicts including the U.S. stance on Hong Kong’s protests and alleged abuses in China’s Xinjiang province.
As China continues to increase agricultural purchases from the U.S., officials are also still wrangling over the provisions for future buying in the agreement. The U.S. wants to lock China in a firm schedule of purchases. China insists that any buying commitments should not conflict with its obligations under World Trade Organization rules. Bloomberg