Trade war exacted a toll on both economies, intensified pressure to reach an accord
By Christopher Rugaber
AP Economics Writer
WASHINGTON (AP) — The Trump administration and Chinese officials are about to hold their eighth round of trade talks in Beijing with several tough issues unresolved, including a timetable for lifting tariffs and a way to enforce any agreement.
Many analysts say they expect some limited agreement to be reached in the coming weeks or months, likely including a pledge by China to buy more U.S. exports. Yet it’s unclear how far any accord would go to address the long-standing Chinese trade practices at the heart of the conflict — from the forced handover of foreign technology secrets to outright cyber-theft — that the administration insists must end.
The backdrop to the talks is a trade war that has exacted a toll on both economies and intensified pressure to reach an accord. Trump’s tariffs on Chinese goods have raised costs for many U.S. manufacturers , forcing some to delay hiring or equipment purchases.
Chinese exporters have also been hurt by Trump’s tariffs, raising the risk of a politically volatile spike in job losses. And Beijing’s counter-tariffs on American exports have made soybeans and other U.S. farm goods costlier in China and harmed U.S. farmers.
The Rhodium Group, a research provider, estimates that the tariffs imposed by both countries, if they remain in place until fall, will shave about $45 billion from US economic output this year. (Its study was done in conjunction with the U.S. Chamber of Commerce.)
Late last week, President Donald Trump expressed guarded optimism about the negotiations that will resume Thursday and Friday.
“I think we’re getting very close,” Trump said in an interview on Fox Business Network. “That doesn’t mean we get there, but I think we’re getting very close.”
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin lead the U.S. delegation. In early April, China’s Vice Premier Liu He is scheduled to visit Washington to resume the talks.
One sticking point is how far Beijing will go to end the forced technology transfers as well as government subsidies that are meant to give its companies a competitive advantage. Those policies are designed to transform Chinese companies into world leaders in such cutting-edge fields as robotics and artificial intelligence. Yet the Trump administration asserts that they violate international trade rules.
Trump last week struck a hard-line tone toward the tariffs he’s imposed. He said he wants to maintain at least the 25 percent import taxes he applied to $50 billion in Chinese goods — a tariff that Beijing wants removed.
“We want to keep that, because we need that,” Trump said.
The White House may also want to preserve at least some of the 10 percent tariffs Trump imposed on an additional $200 billion in Chinese goods. Those remaining taxes would be lifted as China implements its promises.
The administration is also demanding an enforcement mechanism that would allow it to impose new tariffs if it decides that China failed to fulfill its promises under an agreement. In such a case, Trump’s negotiators also want Beijing to pledge not to retaliate — a key point of conflict in the talks.
Derek Scissors, a resident scholar at the American Enterprise Institute, noted that Beijing’s primary goal is to get “serious tariffs off the table.” Trump has suspended two earlier threats he had made: One was to escalate his 10 percent tariffs on Chinese goods to 25 percent. The other was to impose import taxes on the remaining roughly $250 billion in Chinese products that aren’t now subject to tariffs.
Beijing wants those threats permanently shelved. But Scissors said China won’t likely offer much in return if the U.S. insists on keeping some tariffs and demands a tough enforcement mechanism.
“It is inappropriate for China to see frequent guidance and monitoring from the United States,” said Dong Yan, a researcher at the Institute of World Economics and Politics of the official Chinese Academy of Social Sciences. “Enforcement should be in accordance with international conventions.”
A rough outline of a potential agreement has emerged. It would likely include a commitment by China to buy hundreds of billions of dollars more in U.S. exports, including soybeans and natural gas, to address Trump’s complaints about America’s huge trade gap with China. Trump argues that the gap — the disparity between what the United States exports to China and the higher value of what it buys — inflicts economic harm.
Yet few economists regard such a bilateral trade deficit as a problem. Americans, after all, receive many products they want — toys, clothes, and electronics manufactured in China, often at affordable prices — in exchange for their dollars.
Lighthizer has said the accord will also include some provision under which both sides would agree not to devalue its currency to gain a trade advantage. U.S. manufacturers have alleged that Beijing has artificially lowered the value of its currency, the yuan, thereby making its exports more affordable overseas.
The outline of a possible deal also includes a section on intellectual property, officials have said. This reflects the importance the administration has placed on ending Beijing’s practice of forcing companies to share technology as a price of admission to China’s vast market.
This month, China’s ceremonial legislature approved a law barring Chinese regulators, who typically obtain trade secrets from U.S. companies seeking to operate in China, from leaking those secrets to Chinese companies. The law would also make it easier for U.S. companies to do business in China without a partner. U.S. companies are now typically required to share technology with Chinese corporate partners.
American and European chambers of commerce in China have asserted, though, that the law is too vague.
In the meantime, Chinese negotiators want to avoid giving up too much before they decide what Trump will accept, said Bryan Mercurio, a trade law specialist at the Chinese University of Hong Kong.
“You never really know what the Trump administration wants or will settle for,” said Mercurio, a former Canadian trade negotiator.
