International / 7 May 2019, 4:30pm / Ben Blanchard and Jeff Mason
INTERNATIONAL – China said on Monday that a delegation was still preparing to go to the US for trade talks, even as US President Donald Trump dramatically increased pressure on Beijing to reach a deal, saying he would hike tariffs on Chinese goods this week.
Trump’s comments on Sunday marked a major escalation in tensions between the world's two largest economies, and a shift in tone from the president, who as recently as Friday had cited progress toward a deal.
Stock markets sank and oil prices tumbled on his remarks as negotiations to end the months-long trade war were thrown into doubt.
“We are also in the process of understanding the relevant situation. What I can tell you is that China’s team is preparing to go to the US for the discussions,” Chinese Foreign Ministry spokesperson Geng Shuang told a news briefing.
But Geng did not say if Vice-Premier Liu He, who is China’s lead official in the negotiations, will be part of the delegation as originally planned. Negotiations were set to start in Washington tomorrow.
“What is of vital importance is that we still hope the US can work hard with China to meet each other halfway, and strive to reach a mutually beneficial, win-win agreement on the basis of mutual respect,” Geng said.
The Wall Street Journal reported that China was considering cancelling the meetings.
Trump appeared to defend his decision in a tweet yesterday, slamming the US-China trade deficit and vowing not to lose out to Beijing.
A less-than-rosy update from US Trade Representative Robert Lighthizer, including details that China was pulling back from some previous commitments, prompted Trump’s decision.
“The trade deal with China continues, but too slowly, as they attempt to renegotiate. No!” Trump tweeted.
Trump said tariffs on $200 billion (R2.92 trillion) of goods would increase on Friday to 25 percent from 10 percent, reversing a decision in February to keep them at 10 percent due to progress between the two sides.
The president also said he would target a further $325 billion of Chinese goods with 25 percent tariffs “shortly,” essentially covering all products imported to the US from China.
Global financial markets, which had been expecting news of a trade deal soon, went into a tailspin. US equity futures fell more than 2 percent and stocks across trade-reliant Asia tumbled. China’s main indexes slid 5 percent.
Trump's aggressive strategy drew rare bipartisan support from US Senate Democratic leader Chuck Schumer, who urged Trump to “hang tough” in a tweet. “Don’t back down. Strength is the only way to win with China.”
One Chinese trade expert said recent signs of resilience in both economies were breeding over-confidence.
“The urgency is gone. So, it’s likely to see a longer trade war.”
The trade war resulted in billions of dollars in losses for both sides in 2018, hitting autos, technology and above all, agriculture, while inflicting collateral damage on export-reliant economies and companies from Japan to Germany.
On Friday, Trump said talks with China were going well.
Last week, industry sources said they believed the talks were in the end game, but a Trump administration official said aides had told the president that significant hurdles remained.
Negotiations about tariffs have been one of the remaining sticking points. China wants them to be removed, but Trump wants to keep some, if not all, to ensure China lives up to its commitments.