U.S. President Trump delays tariff increase after substantial progress in talks
February 26, 2019 Category Foreign trade, Weekly
Chinese Vice Premier Liu He (4th from right) with U.S. Trade Representative Robert Lighthizer (4th from left) and Treasury Secretary Steven Mnuchin (3rd from left) before the start of U.S.-China trade talks at the White House in Washington on February 21.
U.S. President Donald Trump has announced he will delay an increase in tariffs on Chinese goods that had been scheduled for March 2, citing “substantial progress” in trade talks with China over the weekend. He also said he would hold a summit meeting with Chinese President Xi Jinping at his Mar-a-Lago estate in Florida next month to conclude an agreement, assuming both sides made additional progress. Trump tweeted that progress had been made on “structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues” in the talks in Washington. He ended his tweet by saying that it had been a “great weekend” for the U.S. and China.
The high-level talks in Washington were planned to last two days, but were extended by another 48 hours, after which President Trump decided that sufficient progress had been made to allow for a delay in raising tariffs on USD200 billion of Chinese imports from 10% to 25% on March 2. More negotiations will be held to make further progress before a Trump-Xi summit would be held.
Trade talks between the U.S. and Chinese delegations had resumed in Washington with the aim of signing a memorandum of understanding to solve the trade dispute. The leader of the Chinese delegation, Vice Premier Liu He, has been upgraded to “special envoy of President Xi Jinping” for this seventh round of high-level economic and trade consultations. This gave him authorization to make significant decisions or sign agreements, according to Bai Ming, Deputy Director of the Ministry of Commerce’s International Market Research Institute. Vice Premier Liu He once again had a meeting with President Trump, after which the two day trade talks were extended for a further 48 hours, as the negotiators appeared closer than ever to reaching a deal that would avert further escalation.
They said a trade-war deal is ‘extremely’ likely. China would sharply boost purchases of U.S. agricultural products and open its electronic payment market to Visa and MasterCard. A final agreement to end the trade war – in which Washington has levied taxes on USD250 billion of Chinese goods, prompting Beijing to retaliate with tariffs on USD110 billion of U.S. imports – would require a face-to-face discussion with China’s President Xi Jinping, Trump said.
One U.S. demand is that China keeps the yuan stable, as a devaluation would negate the impact of the tariffs. The U.S. also considers an enforcement mechanism to be an extremely important component of any final deal that would distinguish it from those reached by previous administrations. But China will not be happy with a deal that does not fully eliminate tariffs or allows for them to be reimposed at will by the U.S.
President Trump also said that the U.S. “may or may not include” the subject of Chinese telecom firms Huawei Technologies and ZTE in the trade deal. Though he said that dropping the criminal charges pending against Huawei was not currently under consideration, Trump said his negotiating team would be “discussing all of that during the course of the next couple of weeks and we’ll be talking to the U.S. Attorneys, we’ll be talking to the Attorney General.” Trump added that he did not want to “artificially block people out based on excuses or based on security”.
U.S. Secretary of State Mike Pompeo has said that “if a country adopts Huawei and puts it in some of their critical information systems, we won’t be able to share information with them, we won’t be able to work alongside them”.
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