Sceptics doubtful of trade brea
THE TRUMP administration is celebrating the 90-day truce it reached in its trade war with China as a significant breakthrough despite scant details, a hazy timetable and widespread scepticism that Beijing will yield to the United States demands anytime soon.
“This is just an enormous, enormous event,” Larry Kudlow, President Donald Trump’s top economic adviser, said Monday of the ceasefire that Trump and President Xi Jinping reached at the weekend on the sidelines of an international economic summit in Buenos Aires, Argentina.
“This one covers so much ground in some detail, we’ve never seen this before.”
Yet many economists raised doubts that very much could be achieved within three months.
“The actual amount of concrete progress made at this meeting appears to have been quite limited,” Alec Phillips and other economists at Goldman Sachs wrote in a research note.
RENEWED THREATS
Trump on Tuesday renewed his threats to impose tariffs on Chinese goods if a broader trade deal isn’t reached over the next three months.
“President Xi and I want this deal to happen, and it probably will,” Trump tweeted. “But if not, remember, I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so.”
During the talks in Buenos Aires, Trump agreed to delay a scheduled escalation in US tariffs on many Chinese goods, from 10 per cent to 25 per cent, that had been set to take effect on January 1. Instead, the two sides are to negotiate over US complaints about China’s trade practices, notably that it has used predatory tactics to try to achieve supremacy in technology.
These practices, according to the administration and outside analysts, include stealing intellectual property and forcing companies to turn over technology to gain access to China’s market.
In return for the postponement in the higher US tariffs, China agreed to step up its purchases of US farm, energy and industrial goods, the White House said.
Most economists noted that the two countries remain far apart on the biggest areas of disagreement, which include Beijing’s subsidies for strategic Chinese industries, in addition to forced technology transfers and intellectual property theft.
“Ninety days is very little time to fix these perennial issues,” said Bill Adams, senior economist at PNC.
Kudlow acknowledged those challenges in remarks Tuesday morning.
“China’s discussed these things with the US many times down through the years and the results have not been very good,” he said. “So this time around, as I said, I’m hopeful, we’re covering more ground than ever ... so we’ll see.”
Complicating the challenge, Trump’s complaints strike at the heart of China’s state-led economic model and its plans to elevate China to political and cultural leadership by creating global champions in robotics and other fields.
“It’s impossible for China to cancel its industry policies or major industry and technology development plans,” said economist Cui Fan of the University of International Business and Economics in Beijing.
At the same time, analysts said they were relieved that the Trump-Xi meeting at least pressed the “pause” button on tariff hikes. Besides escalating existing tariffs, Trump had threatened to impose import taxes on the remaining US$267 billion of US goods from China. This would have raised prices in the United States on many consumer items, including smartphones, clothes and toys.
Fears of a hotter trade war had sent financial markets tumbling in October and November. They jumped Monday in response to Saturday’s truce, but then fell again Tuesday morning. The Dow Jones industrial average dropped 200 points, or 0.8 per cent, in early trading.
Megan Greene, chief economist at Manulife, said the market’s recent