US considers higher tariffs on China imports

Trump administration to pressure Beijing to negotiating table

WASHINGTON: The Trump administration is considering more than doubling its planned tariffs on US$200bil in Chinese imports, ratcheting up pressure on Beijing to return to the negotiating table, sources said.

The US imposed 25% tariffs on US$34bil of Chinese products in early July, and the review period on US$16bil more of imports ended July 31. President Donald Trump had threatened an additional US$200bil with levies of 10%, a level the administration may raise to 25% in a Federal Register notice in coming days, a source said.

At the same time, representatives of US Treasury Secretary Steven Mnuchin and Chinese Vice-Premier Liu He are having private conversations as they look for ways to re-engage in negotiations, according to a source.

Holding an open door to talks while threatening worse consequences represents yet another increase in tension in the monthslong standoff between the world’s two largest economies over trade. While the conflict nominally centres around the US’ US$375bil annual goods trade deficit with China, it has morphed into a chapter in the nations’ broader strategic rivalry.

In a sign the trade standoff is reverberating through Chinese politics, the Politburo signalled Tuesday that policy makers would focus more on supporting economic growth amid risks from a campaign to reduce debt and the dispute with Trump.

The communique, which followed a meeting of the country’s most senior leaders led by President Xi Jinping, said the campaign to reduce leverage will continue at a measured pace while improving economic policies to make them more forward-looking, flexible and effective in the second half.

The public comment period on the US tariffs aimed at US$200bil ends Aug 30 after public hearings on Aug 20-23, according to the US Trade Representative’s office. Announcing a higher tariff is required ahead of the hearings and will send a signal that the Trump administration is upping the pressure on China to make serious concessions.

Asian equities were mixed as investors processed the latest news on the US-China trade front. The yuan fell against a trade-weighted basket of currencies for a fourth day to a level that’s near the lowest on record, suggesting policy makers are allowing further weakness.

Trump directed trade representative Robert Lighthizer to raise the tariff rate to 25%, the source said, adding that the change isn’t final yet and may not go forward after a public review.

Officials have cautioned that a specific timetable, the issues to be discussed and the format for talks aren’t finalised, but added there was agreement among the principals that more discussions need to take place. Chinese officials haven’t yet commented on the prospects for resuming talks.

While American and Chinese officials have hinted at the possibility of restarting talks in recent weeks, it’s been almost two months since they last held high-level negotiations.

“China and the US have had several rounds of consultations and reached important consensus, but regrettably the US did not fulfill its obligations,” Foreign Minister Wang Yi said on Monday. “Nor did it make concerted efforts with China.”

The next wave of US tariffs was set to kick in yesterday, with the possible imposition of duties on a further US$16bil of Chinese imports. The implementation could be delayed for weeks as the adminis- tration works out the details of which products it will target. Officials in Beijing have vowed to respond with the same amount of tariffs on US products.

A source said the US is trying to secure certain concessions and if China agrees, it is possible the US would back off additional tariffs.

Complicating Mnuchin’s efforts is a harder line taken by Lighthizer, who has jurisdiction over the US’ 301 investigation that sparked the tariffs.

That case concluded China was stealing American technology and tariffs were needed to offset the damage.

A US Treasury spokesman didn’t respond to a request for comment. The Ministry of Commerce in Beijing didn’t immediately respond to request for comment.

The two sides held three rounds of formal talks, beginning with a delegation to Beijing led by Mnuchin in May. After Liu visited Washington later that month, the nations released a joint statement pledging to reduce the US trade deficit with China, among other things.

But within days, Trump himself backed away from the deal, saying talks would “probably have to use a different structure”.