Trade war: China pulls out of talks with the U.S. over tariffs

Galtero Lara
Setiembre 25, 2018

China and the United States imposed new tariff hikes on each other's goods Monday and Beijing accused Washington of bullying, giving no sign of compromise in an intensifying battle over technology that is weighing on global economic growth.

Trump threatened last week to add $267 billion in Chinese imports to the target list if Beijing retaliated for the latest US taxes. China responded with similar tariffs, but only targeted $60 billion worth of US goods in exchange.

Just last month, the United States imposed a further 25 percent taxes on $16 billion worth of goods from China, in its second wave of tariffs against the Asian superpower.

The latest volley against Beijing brings the amount of goods hit by duties to more than US$250 billion, about half of China's USA exports, with USA consumers set to increasingly feel the pain. China has responded with tariffs on USA goods worth $110 billion and declined an invitation for talks this week.

With no settlement in sight, forecasters say the conflict between the two biggest economies could trim global economic growth through 2020.

The US is "making false accusations against many countries and regions, particularly China, intimidating other countries through economic measures such as imposing tariffs".

Chris Krueger, a strategist at Cowen Washington Research Group, said Trump's lack of direction means the president is likely to fall back on his decades-long preference for trade protectionism - further exacerbating the situation.

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China has pulled out of trade talks with the U.S. in response and attacked the Trump administration's "trade bullyism" in a white paper.

"Protectionist US trade policies have now reached the point where they are materially affecting what remains a strong global growth outlook", the agency said in a report Friday. The Chinese tariff, though smaller than the duty Beijing threatened to levy earlier this year, makes USA gas a bit more expensive and less competitive in the world's second-largest LNG market.

China summoned the U.S. ambassador in Beijing and postponed joint military talks in protest against a USA decision to sanction a Chinese military agency and its director for buying Russian fighter jets and a surface-to-air missile system. This latest round of tariffs is no exception.

China may also be waiting for United States mid-term elections early next month for any hints of changes in Washington's policy stance, Carnell added.

As the fight intensifies, China is running out of USA imports for retaliation.

"The Trump administration must get its position straight though - what does it want from China, and who is empowered as a negotiator by President Trump to bring the deal home?" Instead, it has warned of "qualitative" measures to retaliate. Though Beijing has not revealed what such steps might be, business executives and analysts say it could withhold exports of certain products to the United States or create more administrative red tape for American companies operating in China. Some analysts say there is also a risk that China could allow its currency to weaken again to cushion the blow to its exporters.

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