US, China begin crucial trade talks as tariff clock ticks down

Daniel Fowler
May 13, 2019

Why are the Chinese still taking part in talks?

. "The two sides agree to meet again in Beijing in the future". "We can't have that", Trump said at an event at the White House. We will definitely have to lay off people.

With this move, US President Donald Trump has effectively dealt a fresh blow to not just the Chinese economy - as he had presumably hoped - but also to US's.

A U.S. Trade Representative-issued Federal Register notice, set to be published today, states the administration's intent to raise tariffs on $200 billion of imported Chinese goods starting at 12:01 a.m. Friday to 25% from 10% - the latter of which has been in effect since September. China's Commerce Ministry vowed to impose "necessary countermeasures" but gave no details.

Chinese and United States negotiators are resuming trade talks in Washington amid the threat of fresh tariffs and warnings over the global economy.

People hold a banner outside the Office of the United States Trade Representative in Washington, Thursday, May 9, 2019, where trade talks are going on between the United States and China. Trump complained Beijing was trying to backtrack on earlier agreements. Lighthizer announced Friday evening that he was preparing to impose tariffs on the $300 billion in Chinese imports that haven't already been targeted.

Based on a hypothetical scenario, the report concludes that if the US increases tariffs and non-tariff barriers on all its trading partners by 10 percent, while the latter unanimously take retaliatory measures, the GDP of the USA may decrease by two percent during the first year of trade war, leading to a downturn of the global economy. He urges the Trump administration to look at alternative trade negotiation strategies than tariffs.

Still, the United States has not backed down from hiking tariffs on $200 billion worth of Chinese goods to 25% on Friday.

Trump began the standoff because of complaints about unfair Chinese trade practices. He appealed to Washington to avoid more tariff hikes, saying they are "not a solution to the problem" and would harm the world.

USA sources told Reuters news agency that last week China returned a draft agreement with changes that undermined its commitments to address key U.S. demands. "Major business service firms like JPMorgan Chase will suffer, and USA exports of high-tech products like airplanes and turbines will fall".

That could effectively provide a short grace period for the sides to avert an even more serious escalation.

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Ninety percent of the 300-person company's seafood exports go to the United States, she said, and shipments leaving this week would not be able to beat Friday's tariff hike.

Image copyright Getty Images Image caption U.S. and Chinese officials have held several round of talks in an attempt to strike a deal to end the trade war.

Earlier, Trump asserted in a tweet that his tariffs "will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind".

But the International Monetary Fund has sounded the alarm that the conflict and the loss of confidence it creates will have a wider impact on the global economy and is a major risk to growth.

"If the tariffs go up to 25 percent, costs will go up, customers so far have suspended orders, I don't know what will happen", said Emily Wang of Hainan Zhongyi Frozen Food, which exports tilapia.

"Mentally and materially, China is much better prepared than its U.S. counterpart", the newspaper said.

Naomi Wilson, the Information Technology Industry Council's senior director of policy for Asia, also pointed out that "increasing tariffs would only continue to harm American consumers and businesses of all sizes and across all sectors, as well as threaten American economic growth and leadership in innovation".

"Last year the customer couldn't accept higher prices so our factory needed to lower the price to stay in business", the employee said, adding some smaller competitors had shut up shop.

Beijing responded with penalties on $110 billion of American imports, but is running out of goods for tariff hikes due to their lopsided trade balance.

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