US floats talks after China strikes back in trade fight

WASHINGTON/BEIJING: President Donald Trump’s administration signalled that proposed US tariffs on US$50 billion in Chinese goods may be a negotiating tactic in the escalating US-China trade fight in which China retaliated by targeting key American imports with similar duties.

Just 11 hours after the United States proposed 25 per cent tariffs on some 1,300 Chinese industrial, technology, transport and medical products, China responded with a list of similar duties on major American imports including soybeans, planes, cars, beef and chemicals.

Asked whether the tariffs announced by the United States on Tuesday may never go into effect and may be a negotiating tactic, Trump’s top economic adviser, Larry Kudlow, told reporters, “Yes, it’s possible. It’s part of the process.”

When Kudlow was asked whether the United States could lose a trade war, he said, “No. I don’t see it that way. This is a negotiation, using all the tools.”

US officials said United States may pursue negotiations with and China to resolve deepening differences over trade, but declined to say whether new high-level meetings were planned. Kudlow said backchannel talks were already going on.

A US trade official, speaking on condition of anonymity, said Beijing’s action on Wednesday was an attempt to “intimidate” the United States to “back down” from its trade demands.

Global stock markets, fearful of a trade war between the world’s two economic superpowers, were shaken by the trade salvos but later rebounded.

China’s action rattled US farmers, while shares in US exporters of everything from planes to tractors were volatile.

Trump, who contends his predecessors served the United States badly in trade matters, wrote on Twitter, “We are not in a trade war with China that war was lost many years ago by the foolish, or incompetent, people who represented the US”

The trade actions will not be carried out immediately, so there may be room for manoeuvre.

Publication of Washington’s list on Tuesday started a period of public comment and consultation expected to last around two months. The effective date of China’s moves depends on when the US action takes effect.

While Washington targeted products that benefit from Chinese industrial policy – including its ‘Made in China 2025’ initiative to replace advanced technology imports with domestic products in strategic industries such as advanced IT and robotics – Beijing appeared to offer a response intended to inflict political damage. — Reuters