Trump de­nies roll­back set for tar­iffs on China

‘Haven’t agreed to any­thing,’ he says


WASHINGTON — Pres­i­dent Don­ald Trump on Fri­day dis­missed a Chi­nese of­fi­cial’s asser­tion that his ad­min­is­tra­tion has agreed to roll back some of the higher tar­iffs it has im­posed on Chi­nese goods.

The Chi­nese of­fi­cial said Thurs­day that the two sides had agreed to a phased can­cel­la­tion of their tar­iff in­creases as part of an emerg­ing agree­ment.

Trump’s push-back sug­gested that ne­go­ti­a­tions haven’t pro­gressed as far as hoped as the world’s two big­gest economies strug­gle to ne­go­ti­ate an end to their trade war, which has hurt both economies.

“They’d like to have a roll­back,” Trump told re­porters at the White House, re­fer­ring to the Chi­nese. “I haven’t agreed to any­thing.”

The two sides have been work­ing on an ini­tial “phase one” deal that was an­nounced Oct. 12 but that still isn’t fi­nal.

Fi­nan­cial mar­kets in the U.S. and glob­ally ral­lied Thurs­day at the prospect of an agree­ment to wind down the U.S.-China trade fight, but then fell Fri­day morn­ing after Trump’s com­ments. The Dow Jones In­dus­trial Av­er­age man­aged a slight re­cov­ery and rose 6.44 points, or less than 0.1%, to close

Fri­day at 27,681.24.

Trump re­peated his claims that China wants a deal more than the United States and that the United States ben­e­fits from ex­tra tar­iff rev­enue. The pres­i­dent says the tar­iffs are paid by China, but stud­ies con­ducted since the du­ties were im­posed find that Amer­i­cans busi­nesses and con­sumers are pay­ing them.

“Frankly, they want to make a deal a lot more than I do,” Trump said. “I’m very happy right now. We’re tak­ing in bil­lions of dol­lars.”

A pri­vate sec­tor source with knowl­edge of the talks said Thurs­day that the United States has agreed to sus­pend the du­ties Trump threat­ened to im­pose Dec. 15 on about $160 bil­lion of Chi­nese im­ports as part of the agree­ment. But there is dis­sen­sion in the White House about whether and by how much to roll back 15% du­ties on an­other $112 bil­lion of goods im­posed Sept. 1.

Larry Kud­low also told Bloomberg News on Thurs­day that if a deal was reached, it would in­clude re­duced tar­iffs.

“The White House never speaks with one voice,” Mary Lovely, a trade economist at the Peter­son In­sti­tute for In­ter­na­tional Eco­nom­ics, said Thurs­day.

De­spite Trump’s com­ments, an­a­lysts say the ad­min­is­tra­tion has plenty of in­cen­tives to reach a deal soon. Trump said last month that the phase one pact would in­clude the pur­chase of tens of bil­lions of dol­lars of U.S. farm prod­ucts by China, which would ben­e­fit farm states, many of which sup­ported Trump in 2016.

The tar­iffs im­posed in Septem­ber cov­ered clothes, toys, and shoes, rais­ing prices for many widely-used con­sumer goods.

And the Dec. 15 tar­iffs would mostly hit pop­u­lar con­sumer prod­ucts such as smart­phones and lap­tops. Not only would that raise con­sumer costs, but those tar­iffs would also af­fect many prod­ucts de­signed by U.S. com­pa­nies, for which China gets rel­a­tively lit­tle of the eco­nomic ben­e­fit.

“The De­cem­ber tar­iff round would largely hit prod­ucts de­signed and mar­keted by multi­na­tional firms, mostly with com­po­nents from the United States and its al­lies, and as­sem­bled in non-Chi­nese-owned fac­to­ries,” Lovely wrote on the Peter­son In­sti­tute’s web­site.

The trade war stems from the Trump ad­min­is­tra­tion’s com­plaints that China is seek­ing to un­fairly boost its high-tech in­dus­tries by steal­ing U.S. tech­nol­ogy or forc­ing Amer­i­can com­pa­nies to share it as a con­di­tion of do­ing busi­ness there. Most busi­ness groups and China trade ex­perts agree that China has vi­o­lated trade rules and have largely sup­ported the ad­min­is­tra­tion’s tougher line.

Still, the tar­iffs have hurt both coun­tries’ economies. China said its growth slowed to an an­nual rate of 6% last month, a healthy pace for more ad­vanced economies but China’s slow­est in three decades.

In the United States, busi­nesses are deal­ing with the tar­iffs’ higher costs and are un­cer­tain about their in­ter­na­tional sup­ply chains. They have re­sponded by cut­ting their in­vest­ment spend­ing in new plants and equip­ment for two con­sec­u­tive quar­ters. That’s low­ered U.S. eco­nomic growth to 1.9% at an an­nual rate in the July-Septem­ber quar­ter from 3.1% in the first three months of this year.

A re­port re­leased Wed­nes­day by a trade group op­posed to the du­ties found that Amer­i­cans paid $7.1 bil­lion in tar­iffs in Septem­ber, a record high for a sin­gle month.

Once a phase one deal is reached, the two sides will still need to de­cide where the two lead­ers — Trump and China’s Xi Jin­ping — will sign the pact. The lead­ers had ini­tially ex­pected to meet at an in­ter­na­tional sum­mit in Chile this month, but the gath­er­ing was can­celed be­cause of protests in the cap­i­tal, San­ti­ago.

Re­ports ear­lier this week in­di­cated any fi­nal­iza­tion of a first-phase agree­ment might slip un­til De­cem­ber and that some U.S. lo­ca­tions had been ruled out.

“As­sum­ing we get it, I don’t like to talk about things un­til they hap­pen, but it could be Iowa or farm coun­try or some place like that,” the pres­i­dent said Fri­day. “It will be in our coun­try, but it could be some place like that.”

Robert Lighthizer, the U.S. trade rep­re­sen­ta­tive, is push­ing China to ac­cept an en­force­ment mech­a­nism that would con­di­tion tar­iff re­duc­tions on Chi­nese im­ple­men­ta­tion of the agree­ment. Tar­iffs would fall — or rise — de­pend­ing upon whether Bei­jing com­plied with spe­cific terms, said one per­son fa­mil­iar with the talks.

In re­sponse to the pres­i­dent’s com­ments, Hu Xi­jin, the ed­i­tor of China’s na­tion­al­ist Global Times news­pa­per, tweeted: “What’s cer­tain is that if there’s no roll­back of tar­iffs, there will be no Phase 1 deal.”

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