China and the United States head Thursday into a make-or-break round of trade war negotiations with hopes of a deal hanging by a thread after Washington scheduled a massive tariff hike on Chinese goods.
After months of seemingly collegial talks, Chinese trade envoy Liu He returns to the bargaining table in the US capital under a tense atmosphere after US negotiators accused Beijing of reneging on previously agreed commitments.
President Donald Trump tweeted Wednesday that Liu still wanted to “make a deal”, but the US leader boasted about tariffs that were “not good for China”.
The United States plans to increase tariffs on $200 billion in Chinese goods from 10 to 25 percent on Friday, prompting Beijing to vow to hit back with “necessary countermeasures”.
“By the way, do you see the tariffs we’re doing? Because they broke the deal! They broke the deal!” Trump said at a rally in Florida on Wednesday.
“So they are flying in — the vice premier tomorrow is flying in. Good man. But they broke the deal. They can’t do that. So they’ll be paying if we don’t make the deal.”
This was not how the week was initially meant to go.
The sudden rupture has roiled global stock markets this week, inflaming anxieties among exporters, markets and industries that had been lulled into optimism in recent months as both sides steadily announced progress in their efforts to end the trade war Trump started last year.
Chinese stocks extended the slide Thursday falling in morning trading.
American officials this week accused their Chinese counterparts of retreating from major planks of an agreement they had been working toward since early in the year that aims to resolve Washington’s grievances of industrial theft, massive state intervention in markets and a yawning trade deficit.
“It turns out the Chinese had pulled out an eraser and started taking back things that they had offered,” said Scott Kennedy, a China trade and economics expert at the Center for Strategic and International Studies.
“They didn’t realize when they pulled their concessions off the table that the administration would have the reaction that it did,” he told AFP.
Kennedy warned that the “possibilities for miscalculation on both sides is pretty high.”
Since last year, the two sides have exchanged tariffs on more than $360 billion in two-way trade, gutting US agricultural exports to China and weighing on both countries’ manufacturing sectors.
Trump suggested Wednesday he could just as well leave the tariffs in place
US Trade Representative Robert Lighthizer released an official notice on Wednesday making the tariff increase a virtual fait accompli.
Punitive duties on a vast array of Chinese-made goods, from electrical equipment to machinery to seafood to furniture, will jump to 25 percent at midnight
Chinese producers of the impacted goods this week said the abrupt tariff hike had wreaked havoc on operations and would bring high costs, layoffs and further shifts of production to Southeast Asia.
“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.