The lien will not apply to shipments prior to May 10, which gives a margin of two weeks to be effective.
The deadline set by Donald Trump is fulfilled and the trade war that the United States has waged for almost a year with China enters a new, more dangerous phase. The already existing tariffs on thousands of Chinese imported products valued at 200,000 million dollars rise from 10% to 25%. The protectionist action was activated in the middle of a new round of negotiations in Washington to try to resolve the dispute. Beijing has promised an answer.
US tariffs to China
The first contact of the Chinese vice premier, Liu He, with Robert Lighthizer and Steven Mnuchin lasted only 90 minutes. They did not disclose any details but the meeting did not produce the necessary progress to avoid the increase in tariffs. They agreed to resume the discussions this Friday morning. Also, this time it is not expected that Donald Trump will receive the Chinese envoy in the Oval Office as on previous occasions.
After the entry into force of tariffs, China “will have to take the necessary response measures,” said the Ministry of Commerce in Beijing in a brief statement, which has not provided details on what kind of steps, exactly, Poses to adopt. It has several means at its disposal, from slowing down the passage of American goods in the customs to ordering their companies to stop buying US products.
“China deeply regrets” that the United States has resorted to this pressure measure, the statement said. “The 11th round of high-level economic and trade consultations between China and the United States is taking place. China hopes that the two countries can meet halfway and undertake joint efforts to solve the current problems through cooperation and consultations. ”
Trump said less than 12 hours after activating the hike in tariffs that the agreement was possible. He said that his Chinese counterpart Xi Jinping had written him saying that they could work together to achieve a solution. “I do not know what’s going to happen,” he added at a press conference, to later make clear his discomfort. “They can not take parts of the agreement and renegotiate it being so close,” he reproached her.
Trump practically assumed that the increase in tariffs would take effect when the clock crossed midnight on the Atlantic coast of the United States. “I do not think they are ready,” he reiterated, referring to the achievement of the eventual pact. Moreover, he explained that the process is already under way to apply tariffs to all imports. “I gave them a break in good faith because we negotiated,” he recalled.
The United States began applying a 10% tariff at the end of last September to a list made up of 5,745 Chinese products. They added to those that already applied 25% to imported goods valued at 50,000 million. The idea of Trump was to raise them to 25% at the beginning of the year if the Asian giant resigned to negotiate and maintained its practices. But the two parties decided to take a temporary truce.
The talks seemed to move toward the agreement, until the Republican sent two messages on Twitter threatening. The new round that began Thursday in Washington coincided with the publication of the trade balance indicator. It reflects that trade with China was reduced by almost 4% and that the deficit fell by 14% in the first quarter when compared to the beginning of 2018.
As usual in Trump, he uses a double language that made it difficult to anticipate if he was going to make a last-minute gesture that avoided escalation. This Thursday he even talked about the possibility of having a telephone exchange with Xi in the coming days. But that would imply that the role of the deputy prime minister, Liu He, would have been lowered and he would not be in a position to close the pact.
Eurasia Group analysts positively value the fact that Trump and Xi are willing to speak directly, despite this climate of tension. “It means that the relationship is not as toxic as it was feared,” he says. Although they also warn that you have to see how that channel works in case of an escalation. Beijing has already warned that it will respond to the tariff measures.
Technically, the 25% tariff does not apply to merchandise that left Chinese ports before May 10. That gives a margin of two weeks for the parties to reach a compromise. But it is a very limited window. In addition, the Foreign Trade Office could present its proposal to begin taxing Chinese products worth 325,000 million that are not subject to a tariff.
The International Monetary Fund, meanwhile, warned again that if the trade conflict between the two powers is prolonged, it will mean “a threat to world growth.” “We hope there is a quick solution,” said the spokesman of the multilateral body, “everyone is pending.” In a technical report already indicated that neither of the two countries wins with this confrontation.
Trump, however, again resorted to one of the campaign arguments to justify his decision. “We will not continue to pay half a billion dollars each year,” he said, referring to the trade deficit, “we are going to recover more money than ever before with tariffs.” The president attributes the growth momentum to the collection that the customs taxes in force since the summer are generating.
He also attacked the agreement that allowed China to enter the World Trade Organization. “His economy went up like a rocket,” he explained, “they did it with our money.” “I do not like that they take advantage of us”, he reiterated, “we are going to stop being the piggy bank that everybody steals from”. In this sense he said that he has an “excellent alternative” to the agreement with China, without specifying.