China: Deal off if U.S. tariffs on
Trade talks end at impasse
BEIJING — China said Sunday that it wouldn’t step up its purchases of American products if President Donald Trump goes ahead with his threat to tax billions of dollars’ worth of Chinese imports.
White House advisers, meanwhile, insisted on fundamental changes in ties between the world’s two biggest economic powers.
China’s warning came after delegations led by U.S. Commerce Secretary Wilbur Ross and China’s top economic official, Vice Premier Liu He, wrapped up a meeting on Beijing’s pledge to narrow its trade surplus. Ross said they had discussed specific American exports China might purchase, but the talks ended with no joint statement and neither side released details.
“If the United States introduces trade sanctions including a tariff increase,
all the economic and trade achievements negotiated by the two parties will not take effect,” said a Chinese government statement, carried by the official Xinhua News Agency.
The negotiating process should be “based on the premise” of not fighting a “trade war,” the statement said.
The apparent impasse left the Trump administration with the issue of what to do about China’s industrial policies. It also left unresolved the issue of the Chinese telecommunications company
ZTE, which had violated sanctions against North Korea and Iran.
“Both sides appear to have hardened their negotiating stances and are waiting for the other side to blink,” said Eswar Prasad, professor of trade policy at Cornell University. “Despite the potential negative repercussions for both economies, the risk of a full-blown China-U.S. trade war, with tariffs and other trade sanctions being imposed by both sides, has risen significantly.”
Asked specifically on Fox’s Sunday Morning Futures if the U.S. is willing to throw away its relationship with China by proceeding with threatened tariff increases, Peter Navarro, director of the White House National Trade Council, pointed in part to an unfair relationship involving a multi-billion dollar trade deficit, Defense Secretary James Mattis’ warning of China’s activities in the South China Sea and the threat of China stealing U.S. intellectual property.
“That’s a relationship with China that structurally has to change,” he said. “We would love to have a peaceful, friendly relationship with China. But we’re also standing firm that the president is the leader on this.”
Trump had underlined his administration’s plans to confront China on trade when he wrote on Twitter while the American team was in Beijing, “When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War!”
The United States has threatened to impose tariffs on up to $50 billion of Chinese products in a dispute over Beijing’s aggressive tactics to challenge U.S. technological dominance; Trump has asked U.S. Trade Rep. Robert Lighthizer to look for another $100 billion in Chinese products to tax.
China has targeted $50 billion in U.S. products in retaliation.
Tensions temporarily eased May 19 after China promised to “significantly increase” its purchases of U.S. farm, energy and other products. Treasury Secretary Steven Mnuchin said then that the U.S. tariffs were suspended and the trade war was “on hold.”
The purchases are meant to reduce America’s trade deficit in goods and services with China, which last year came to $337 billion, according to the U.S. Commerce Department.
After the apparent ceasefire, global financial markets rallied in relief.
But Trump upended the truce Tuesday by renewing his threat to impose 25 percent tariffs on $50 billion in Chinese high-tech goods. The tariffs are meant to pressure Beijing for allegedly stealing trade secrets and forcing foreign companies to hand over technology in exchange for access to the Chinese market. Navarro later called Mnuchin’s conciliatory comments “an unfortunate soundbite.”
Ross nonetheless journeyed to Beijing on Friday to work out details of the vague agreement Mnuchin had earlier cobbled together with the Chinese vice premier. China balked at making concessions unless the U.S. lifted the tariff threat.
If the United States imposes the tariffs, China has previously said, Beijing would retaliate by blocking an equal value of soybeans and other goods from the United States. That would amount to more than onethird of Chinese imports of American goods.
U.S.’ BAN ON ZTE
In addition to the tariff dispute, Chinese officials have expressed deep concern about ZTE, a 70,000-employee telecommunications company that has largely shut down operations in the past month after an obscure American government agency, the Bureau of Industry and Security, ordered U.S. companies to stop selling crucial microchips and software to ZTE for seven years.
Then, in a tweet about three weeks ago, Trump said that the Commerce Department should reconsider American sanctions on ZTE, without any obvious Chinese concession in exchange. The arrival of Ross and his team in Beijing had fostered optimism in China that the issue could be settled without any big moves by Beijing.
“Chinese officials know these talks are precarious but may underestimate the domestic political cost Trump now sees in lifting the ZTE ban without major concessions from China,” said Andrew Gilholm, director of China analysis at Control Risks, a political and security consulting firm. “If the ban stays, Beijing’s retaliation will definitely go up a gear.”
Chinese state media have glossed over why the U.S. sales ban was imposed: ZTE’s ties to North Korea and Iran.
The company’s links to North Korea in particular are politically inconvenient for China because Beijing has claimed that China’s enforcement of international sanctions against North Korea helped pave the way for the coming summit in Singapore between Trump and North Korea’s leader, Kim Jong Un.
State news outlets have portrayed the ZTE decision as having been made by Ross’ Commerce Department, and they have suggested that it is merely a bargaining ploy as part of trade negotiations. But though the Bureau of Industry and Security, a law enforcement agency, is legally part of the Commerce Department, it has considerable autonomy.
G-7 DISPUTE
The dispute with China comes at the same time Trump has riled some of America’s closest allies with the imposition of tariffs on steel and aluminum imports.
After a three-day meeting of finance ministers from the Group of Seven industrial nations that ended Saturday in Canada, Canadian Finance Minister Bill Morneau issued a summary saying the other six members want Trump to hear their message of “concern and disappointment” over the U.S. trade actions.
Allies including Canada and the European Union are threatening retaliatory tariffs.
Canadian Prime Minister Justin Trudeau told NBC’s Meet the Press on Sunday that the reciprocal tariffs would hurt both U.S. and Canadian workers and consumers.
He also pushed back against the argument that
Canadian steel poses a U.S. security threat.
“The idea that we are somehow a national security threat to the United States is quite frankly insulting and unacceptable,” he said.
Bruno Le Maire, France’s finance and economy minister, also called the U.S. tariffs unjustified.
“We regret that our common work together at the level of the G-7 has been put at risk by the decisions taken by the American administration on trade and on tariffs,” he said.
Other countries have also criticized the U.S. tariffs. Singapore’s defense minister, Ng Eng Hen, criticized both the U.S. and China for taking “unilateral actions,” lumping the two rivals together as nations challenging the current global order.
In a speech at the annual Shangri-La Dialogue security forum in Singapore, Ng said the world’s two biggest economies were similarly using security considerations to justify their behavior — the U.S. on trade and China for its military buildup in the disputed South China Sea.
“Whatever the merit of these arguments, these deviations from global norms challenge the status quo and accepted rules which have hitherto benefited Asia and the regions beyond,” Ng said.
Ng called on the U.S. and China to improve their relationship in the interests of others. That’s even as the Pentagon in a report earlier this year warned of a new era of great-power rivalry with China and Russia.
“It would be a lose-lose scenario for the world if the U.S. and China are unwilling to work together for an inclusive system that both large and small states can benefit from, and where rules apply to all,” Ng said.
Information for this article was contributed by Joe McDonald, Paul Wiseman and Matt O’Brien of The Associated Press; by Keith Bradsher of The New York Times; and by Rosalind Mathieson of Bloomberg News.