Tag Archives: Chinese imports

China warns of retaliation after Trump threatens fresh tariffs

By Andrea Shalal, Alexandra Alper and Huizhong Wu

BEIJING/WASHINGTON (Reuters) – China on Friday said it would not be blackmailed and warned of retaliation after U.S. President Donald Trump vowed to slap a 10% tariff on $300 billion of Chinese imports from next month, sharply escalating a trade row between the world’s biggest economies.

Trump stunned financial markets on Thursday by saying he plans to levy the additional duties from Sept. 1, marking an abrupt end to a truce in a year-long trade war that has slowed global growth and disrupted supply chains.

Beijing would not give an inch under pressure from Washington, Chinese Foreign Ministry spokeswoman Hua Chunying said.

“If America does pass these tariffs then China will have to take the necessary countermeasures to protect the country’s core and fundamental interests,” Hua told a news briefing in Beijing.

“We won’t accept any maximum pressure, intimidation or blackmail. On the major issues of principle we won’t give an inch,” she said, adding that China hoped the United States would “give up its illusions” and return to negotiations based on mutual respect and equality.

Trump also threatened to further raise tariffs if Chinese President Xi Jinping fails to move more quickly to strike a trade deal.

The newly threatened duties, which Trump announced in a series of tweets after his top trade negotiators briefed him on a lack of progress in talks in Shanghai this week, would extend tariffs to nearly all Chinese goods that the United States imports.

The president later said if trade discussions failed to progress he could raise tariffs further – even beyond the 25 percent levy he has already imposed on $250 billion of imports from China.

Senior Chinese diplomat Wang Yi told reporters on the sidelines of an Association of Southeast Nations event in Thailand that additional tariffs were “definitely not a constructive way to resolve economic and trade frictions”.

U.S. Secretary of State Mike Pompeo, who was also in Bangkok, decried “decades of bad behavior” by China on trade and said Trump had the determination to fix it.

The news hit financial markets hard. On Friday, Asian and European stocks took a battering and safe-haven assets such as the yen, gold and government bonds jumped as investors rushed for cover.

Retail associations in the United States predicted a spike in consumer prices, hitting consumer stocks on Thursday on Wall Street, where Target Corp tumbled 4.2%, Macy’s Inc fell 6% and Nordstrom Inc was down 6.2%.

Asked about the impact on financial markets, Trump told reporters: “I’m not concerned about that at all.”

Moody’s said the new tariffs would weigh on the global economy at a time when growth is already slowing in the United States, China and the euro zone.

The tariffs may also force the Federal Reserve to again cut interest rates to protect the U.S. economy from trade-policy risks, experts said.

CHINESE RETALIATION?

One Chinese official told Reuters it was not the first time Trump had “flip-flopped”, and that though the time between the talks being declared constructive and Trump’s threat of new tariffs was short, officials in Beijing were already prepared.

“Discussion followed by a fight has become the normal pattern,” the official said.

Possible retaliatory measures by China could include tariffs, a ban on the export of rare earths that are used in everything from military equipment to consumer electronics, and penalties against U.S. companies in China, analysts say.

So far, Beijing has refrained from slapping tariffs on U.S. crude oil and big aircraft, after cumulatively imposing additional retaliatory tariffs of up to 25% on about $110 billion of U.S. goods since the trade war broke out last year.

China is also drafting a list of “unreliable entities” – foreign firms that have harmed Chinese interests. U.S. delivery giant FedEx is under investigation by China.

“China will deliver each retaliation methodically, and deliberately, one by one,” ING economist Iris Pang wrote in a note.

“We believe China’s strategy in this trade war escalation will be to slow down the pace of negotiation and tit-for-tat retaliation. This could lengthen the process of retaliation until the upcoming U.S. presidential election,” Pang said.

FRUSTRATED

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin briefed Trump earlier this week on their first face-to-face meeting with Chinese officials since Trump met Xi at the G20 summit at the end of June and agreed to a ceasefire in the trade war.

“When my people came home, they said, ‘We’re talking. We have another meeting in early September.’ I said, ‘That’s fine, but until such time as there’s a deal, we’ll be taxing them,” Trump told reporters.

A source familiar with the matter said Trump grew frustrated and composed the tweets shortly after Lighthizer and Mnuchin told him China made no significant movement on its position.

Previous negotiations collapsed in May, when U.S. officials accused China of backing away from earlier commitments.

American business groups in China expressed disquiet over the latest round of U.S. tariffs. The U.S.-China Business Council said on Friday it was concerned the action “will drive the Chinese from the negotiating table, reducing hope raised by a second round of talks that ended this week in Shanghai”.

“We are particularly concerned about increased regulatory scrutiny, delays in licenses and approvals, and discrimination against U.S. companies in government procurement tenders,” said the U.S.-China Business Council’s President Craig Allen in an e-mail.

Ker Gibbs, the president of the American Chamber of Commerce in Shanghai, said that as market access in China “remains unnecessarily restricted”, the United States should continue its dialogue with Beijing, and “also work with like-minded countries to persuade China that fair and reciprocal trade and investment benefits all.”

CROPS AND DRUGS

Trump said Beijing had failed to fulfill promises to stop sales of the synthetic opioid fentanyl to the United States, which U.S. officials say was to blame for most of more than 28,000 synthetic opioid-related overdose deaths in the United States in 2017.

He also said Beijing had not followed through on a goodwill pledge to buy more U.S. agricultural products.

The U.S. Department of Agriculture on Thursday confirmed a small private sale to China of 68,000 tonnes of soybeans in the week ended July 25.

The United States also has yet to ease restrictions on U.S. companies’ sales to Chinese telecommunications giant Huawei, which Trump had pledged as a goodwill gesture to Xi after meeting at the G20 in Osaka.

(Reporting by Andrea Shalal, Alexandra Alper, Steve Holland, David Lawder, Tim Ahmann, Susan Heavey, Makini Brice, Nandita Bose and Jonathan Landay in Washington; and Huizhong Wu, Xu Jing, Stella Qiu, Se Young Lee, and Min Zhang in Beijing; and Brenda Goh in Shanghai; Writing by Ryan Woo and Michael Martina; Editing by Grant McCool, Shri Navaratnam and Alex Richardson)

Exclusive: China shifts position on tech transfers, trade talks progress – U.S. officials

Members of the U.S. trade delegation Robert Lighthizer and Steven Mnuchin arrive at a hotel in Beijing, China March 28, 2019. REUTERS/Jason Lee

By Jeff Mason

WASHINGTON (Reuters) – China has made proposals in talks with the United States on a range of issues that go further than it has before, including on forced technology transfer, as the two sides work to overcome obstacles to a deal to end their protracted trade war, U.S. officials told Reuters on Wednesday.

U.S. President Donald Trump imposed tariffs on $250 billion of Chinese imports last year in a move to force China to change the way it does business with the rest of the world and to pry open more of China’s economy to U.S. companies.

Among Trump’s demands are for Beijing to end practices that Washington alleges result in the systematic theft of U.S. intellectual property and the forced transfer of American technology to Chinese companies.

U.S. companies say they are often pressured into handing over the technological know-how behind their products to Chinese joint venture partners, local officials or Chinese regulators as a condition for doing business in China. The U.S. government says that technology is often subsequently transferred to and used by Chinese competitors.

The issue has proved a tough one for negotiators as U.S. officials say China has previously refused to acknowledge the problem exists to the extent alleged by the United States, making discussing a resolution difficult.

China says it has no technology transfer requirements enshrined in its laws and any such transfers are a result of legitimate transactions.

China has put proposals on the table in the talks that went further than any in the past, including on technology transfer, said one of four senior U.S. administration officials who spoke to Reuters.

“They’re talking about forced technology transfer in a way that they’ve never wanted to talk about before – both in terms of scope and specifics,” he said, referring to Chinese negotiators. He declined to give further detail.

Negotiators have made progress on the details of the written agreements that have been hashed out to address U.S. concerns, he said.

Reuters reported previously that the two sides were working on written agreements in six areas: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade.

“If you looked at the texts a month ago compared to today, we have moved forward in all areas. We aren’t yet where we want to be,” the official said, speaking on condition of anonymity.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin arrive in Beijing on Thursday for a new round of talks with Chinese officials to work on a deal that would end a months-long trade war that has cost both sides billions of dollars and hurt global economic growth.

The in-person talks, which will be followed by a round in Washington next week, are the first face-to-face meetings the two sides have held in weeks after missing an initial end-of-March goal for a summit between U.S. President Donald Trump and Chinese President Xi Jinping to sign a pact.

Talks would continue as long as progress is being made on the core issues, the official said.

“It could go to May, June, no one knows. It could happen in April, we don’t know,” another administration official said.

The two sides still have differences over intellectual property and how to enforce a deal, he said.

‘SOME TARIFFS WILL STAY’

China wants the United States to lift its tariffs as part of a deal. Washington, which is cognizant that the tariffs give it leverage to ensure Beijing follows through on any commitments it makes, is wary of lifting them right away.

Trump said last week the United States may leave tariffs on Chinese goods for a “substantial period” to ensure compliance.

“Some tariffs will stay,” the second official said. “There’s going to be some give on that, but we’re not going to get rid of all the tariffs. We can’t.”

The topic will be addressed in upcoming talks.

“Obviously that is an issue that we need to resolve … and will be an important part of a final deal,” the first official said. He said there was some agreement on enforcement on what he termed the “backend” once a deal was in place: a structure in which both sides could raise grievances and implement tariffs if there were violations to the agreement.

Since July 2018, the United States has imposed duties on $250 billion worth of Chinese imports, including $50 billion in technology and industrial goods at 25 percent and $200 billion in other products including furniture and construction materials, at 10 percent.

China has hit back with tariffs on about $110 billion worth of U.S. goods, including soybeans and other commodities.

The first official said the focus of talks had shifted from Chinese purchases of U.S. goods to the trickier structural issues, which he said Trump wanted as part of a “great” deal.

Bipartisan support at home for his tough stance on China as well as from the business community have emboldened Trump as he pushes for a deal that addresses long-standing complaints on trade, the source said.

Some officials have expressed concern that Trump would accept a deal involving big-ticket Chinese purchases of U.S. goods and falling short on structural issues.

“Who would he be pleasing by .. selling out?” the source said.

He expressed optimism that a deal would be reached.

“I’m still confident, but it takes time,” he said.

“Until any deal is finalized, it can always go either way. And the president has made clear, both in word and in action, that he’s going to walk away from deals if they’re not good deals.”

(Reporting by Jeff Mason; Editing by Peter Cooney, Simon Webb, Shri Navaratnam and Nick Zieminski)