Top US and Chinese trade officials yesterday were to discuss plans for China to buy more US agricultural products, but in return Beijing was to request the cancelation of some planned and existing US tariffs on Chinese imports, people briefed on the talks said.
US Trade Representative Robert Lighthizer, US Secretary of the Treasury Steven Mnuchin and Chinese Vice Premier Liu He (劉鶴) were due to speak by telephone, their latest attempt to calm a nearly 16-month trade dispute that is roiling financial markets, disrupting supply chains and slowing global economic growth.
The two sides are working to try to agree on a text for a “phase 1” trade agreement announced by US President Donald Trump on Oct. 11, in time for him to sign it with Chinese President Xi Jinping (習近平) next month at a summit in Chile.
So far, Trump has only agreed to cancel an Oct. 15 increase in tariffs on US$250 billion of Chinese goods as part of understandings reached on agricultural purchases, increased access to China’s financial services markets, improved protections for intellectual property rights and a currency pact.
However, to seal the deal, Beijing is expected to ask Washington to drop its plan to impose tariffs on US$156 billion of Chinese goods — including smartphones, laptops and toys — on Dec. 15, two US-based sources said.
Beijing also is likely to seek the removal of 15 percent tariffs imposed on Sept. 1 on about US$125 billion of Chinese goods, one of the sources said.
Trump imposed the tariffs in August after a failed round of talks, effectively setting up punitive duties on nearly all of the US$550 billion of goods the US imports from China.
“The Chinese want to get back to tariffs on just the original US$250 billion in goods,” the source said.
Washington-based American Enterprise Institute China expert Derek Scissors said the original goal of this month’s talks was to finalize a text on intellectual property, agriculture and market access to pave the way for a postponement of the Dec. 15 tariffs.
“It’s odd that [Trump] was so upbeat with Liu He and yet we still don’t have the Dec. 15 tariffs taken off the table,” Scissors said.
If a text can be sealed, Beijing in return would exempt some US agricultural products from tariffs, including soybeans, wheat and corn, a China-based source said.
Buyers would be exempt from tariffs and get returns for tariffs they had already paid on previous purchases of the products on the list, but the ultimate amounts of Chinese purchases are uncertain.
Trump has touted purchases of US$40 billion to US50 billion annually — far above China’s 2017 purchases of US$19.5 billion, according to American Farm Bureau data.
One of the sources briefed on the talks said that China’s offer would start out at about US$20 billion in annual purchases, largely restoring pre-dispute levels, but this could rise over time.
Purchases would also depend on market conditions and pricing.
While the US tariffs on Chinese goods has brought Beijing to the negotiating table to address US grievances over its trade and intellectual property practices, they have so far failed to lead to significant change in China’s state-led economic model.
The “phase 1” deal would ease tensions and provide some market stability, but is expected to do little to deal with core US complaints about Chinese theft and forced transfer of intellectual property and technology.