Published: Fri, May 10, 2019
Money | By Ethel Goodwin

Trade war: Trump says China 'broke the deal' in trade talks

Trade war: Trump says China 'broke the deal' in trade talks

But he held out hopes of salvaging a deal.

China's Commerce Ministry confirmed the latest U.S. tariff increase on its website.

The president said Xi's message was: "Let's work together". The Shanghai Composite Index fell 1.5% to close at 2,850.95. Trump said Sunday he might expand penalties to all Chinese goods shipped to the United States.

The tariff was due to rise at the start of the year, but the increase was delayed as negotiations advanced.

Retailers, manufacturers, small farmers and multinational conglomerates are united in their concern about the potentially damaging impacts of additional tariffs to their businesses and their consumers. China is a major buyer of USA soybeans.

Chinese Vice Premier Liu He was heading to Washington for two days of talks, but Trump's insistence that China "broke the deal" and Beijing's response that it would retaliate against tariffs ratcheted up the stakes.

"If the tariffs go up to 25pc, 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.

The US has banned federal agencies from using Huawei technology and has done everything in its power to convince allies to bar Huawei, ZTE, and other Chinese firms from bidding on 5G contracts, to the point of threatening the United Kingdom with ejection from the Five Eyes intelligence sharing network if they awarded a contract to Huawei. "They've been allowed to skate for far too many years". "We've taken well over $100 billion from China in a year".

Anthony Nieves, who heads a survey of the services sector by the Institute for Supply Management, said the tariffs were hitting China "a lot more than what we're feeling over here in the states".

They will nearly certainly have to pass on that cost to American consumers - and that means higher prices.

"The escalation of trade friction is not in the interest of the people of the two countries and the people of the world", a Chinese Commerce Ministry spokesman said, as quoted by Xinhua and The Wall Street Journal.

"Our industry supports more than 18 million U.S. jobs - but raising tariffs will be disastrous".

US Trade Representative Robert Lighthizer released an official notice on Wednesday making the tariff increase a virtual fait accompli.

Robert Lighthizer, the chief United States trade negotiator, is scheduled to meet at 5pm on Thursday (9am Friday, NZT) with Chinese Vice Premier Liu He to continue negotiations aimed at a comprehensive trade deal.

The talks were due to resume Friday after wrapping up with no word on progress. Recent history suggests that Trump can talk big on trade but settle for a moderate deal, as has been seen with the new North American free trade deal. "In regard to the "structural" issues - including intellectual property and forced technology transfers - what sort of enforcement mechanism will be established?"

Trump's top trade negotiators, Lighthizer and Mnuchin, met with their Chinese counterparts for a meeting and working dinner that kicked off at 5 p.m. on Thursday. It's really paid, largely, by China. "It will also be bad for the world economy", said Gary Hufbauer of the Peterson Institute for International Economics. We never took in 10 cents from China.

But on Sunday Mr Trump said on Twitter that the USA would hike tariffs on $US200b worth of Chinese goods this week and could introduce fresh tariffs. The key sticking point in talks right now is that China can't see eye-to-eye with the U.S. on more structural issues, as highlighted here earlier in the week.

Both sides have already imposed tariffs on billions of dollars worth of one another's goods.

Trump raised duties on $250 billion of Chinese imports starting in July over complaints Beijing steals or pressures companies to hand over technology.

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