China is setting its price for signing an interim trade deal with the United States: drop the tariffs.
With talks underway over a narrow agreement to defuse the escalating trade war, Beijing has asked the Trump administration to eliminate some of the duties the president has imposed. China also made clear that new tariffs are a nonstarter.
For Trump, the self-proclaimed “Tariff Man,” the challenge is how -- or whether -- to walk back duties that have formed a central plank of his effort to remake U.S.-China trade.
With the U.S. presidential election only a year away, the two sides are trying to hammer out a relatively narrow, “phase-one” deal that Trump and his Chinese counterpart Xi Jinping planned to sign at a now-canceled Asia-Pacific summit in Chile next week. In the quest for a new location, China is seeking a roll back of tariffs before Xi agrees to take the politically risky step of heading to the U.S. to sign a deal.
People familiar with the deliberations say Beijing has asked the Trump administration to pledge not only to withdraw threats of new tariffs but also to eliminate duties on about $110 billion in goods imposed in September. Negotiators are also discussing lowering the 25% duty on about $250 billion that Trump imposed last year, the people said. On the U.S. side, people say it’s not clear if Trump, who will have the final say, will be willing to cut any duties.
From the Chinese perspective, the argument is that if they are going to remove one big point of leverage and resume purchases of American farm goods and make new commitments to crack down on intellectual property theft -- the key elements of the interim deal -- then they want to see equivalent moves to remove tariffs by the U.S. rather than the simple lifting of the threat of future duties.
That was the case reiterated by Chinese state media on Tuesday.
Tariffs, however, have been one of the primary weapons in Trump’s arsenal to redirect manufacturing supply chains out of China, slow the country’s rise as a global economic power and pressure Communist Party leaders into making more fundamental reforms to their state-led industrial policy.
Some of Trump’s own aides are worried about the impact of the tariffs on the U.S. economy, however. As are many businesses.
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