Tense U.S.-China Trade Talks Underway With Threat Of Tariffs Looming

Tense U.S.-China Trade Talks Underway With Threat Of Tariffs Looming

May 9, 20198:02 PM ET

Jim Zarroli

Sasha Ingber

A shopper browses digital products at a market in Beijing. Trade tensions between China and the United States have grown significantly this week, after the Trump administration accused Beijing of backing down from commitments it had made in trade negotiations.

Andy Wong/AP

The Trump administration is poised to raise tariffs on $200 billion in imported products from China at 12:01 a.m. Friday, significantly raising the stakes in the ongoing trade dispute with Beijing.

The clock is ticking as Beijing officials are in Washington, attempting to reach an agreement that would address U.S. concerns about Chinese business practices, including intellectual property theft and state-subsidized companies.

Until last weekend, the two countries appeared to be heading toward an accord. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer indicated that a deal was in sight.

But U.S. officials said this week that China had backtracked on commitments it had made earlier. It didn’t specify what the commitments were.

As a result, the Trump administration said it would increase existing tariffs on $200 billion worth of consumer and business products to 25% from 10%

It wasn’t the first time that Trump said tariffs would rise. The president threatened to increase tariffs in January and March, but the administration held off both times to give negotiators more time to make a deal.

Financial markets have fallen this week in response to the escalation of the trade dispute and the prospect of higher tariffs. The S&P 500 is on track for its biggest decline of the year. The Dow fell 138.97 points Thursday.

The tariffs are imposed when the products are brought into the United States, which means the cost is borne by importers, who can either pay it themselves or pass it on to customers. In some cases, Chinese exporters may also be persuaded to lower their prices before the goods are shipped.

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Trump recently said the United States can take in $120 billion a year in tariffs, “paid for mostly by China,” but economists say much of it will be paid by U.S. businesses and consumers.

The tariffs will be applied only to goods shipped after Friday. That will provide some relief to U.S. businesses that have orders in transit. And there still is more time to reach a deal; negotiators are meeting in an attempt to do that.

Wednesday, Trump seemed to hold out hope that an agreement could still be reached to prevent the tariff hikes, noting that he had received a “beautiful” letter from Chinese President Xi Jinping.

“I have no idea what’s going to happen,” Trump said.

In China, some economists said the trade war would slow the country’s economic growth and the government may need more economic stimulus to soften the blow.

The Chinese government controls media in the country and has been steadily working to prevent the public from seeing news that Trump threatened more tariffs by removing content from social media sites.

“I don’t know much about what’s going on,” a 45-year-old man named Jo Jiun Hwei told NPR this week. “I think it’s the American president’s fault. That’s what they’re saying on the news at least.”


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