White House ratchets up trade fight

Chinese Vice Premier Liu He (C), US Treasury Secretary Steven Mnuchin (L) and US Trade Representative Robert Lighthizer (R) arrive for a group photo session after concluding their meeting at the Diaoyutai State Guesthouse in Beijing, China, May 1, 2019. EPA-EFE/ANDY WONG / POOL

WASHINGTON.- Prospects for a speedy conclusion to the U.S.-China trade fight dimmed Monday after U.S. officials accused Beijing of reneging on its promises and vowed to raise tariffs on $200 billion in Chinese imports to 25% starting Friday, according to a Dow Jones report supplied to EFE.

«Over the course of the last week or so, we’ve seen an erosion in commitments by China, I would say retreating from commitments that have already been made, in our judgment,» U.S. Trade Representative Robert Lighthizer told reporters in Washington.

The comments from Mr. Lighthizer, who was joined by Treasury Secretary Steven Mnuchin, followed tweets from President Trump on Sunday that accused China of trying to «renegotiate» and threatened to expand tariffs to cover nearly everything the U.S. imports from China.

Mr. Trump’s threat rattled financial markets around the world, but also triggered speculation that it might be a negotiating tactic aimed at getting the best deal out of Beijing.

While U.S. stocks recoiled sharply Monday morning, they staged a comeback in the afternoon, with the Dow Jones Industrial Average ending the day down 0.3% at close. Mainland China stock exchanges in Shanghai and Shenzhen posted their biggest single-day declines since 2016.

The briefing from Messrs. Lighthizer and Mnuchin, which took place after U.S. markets closed on Monday, made it clear there are deep concerns about the direction of the talks that go beyond negotiating style.

In a show of unity by an administration often divided between trade-friendly officials and China hawks, the two officials were joined at Monday’s briefing by economic adviser Larry Kudlow and trade-and-manufacturing adviser Peter Navarro.

«The level of brinkmanship on both sides and their obvious mutual distrust has made the path to even a temporary cease-fire a lot murkier than just a few days ago,» said Eswar Prasad, professor of trade policy at Cornell University. «It is likely a cooling-off period will be needed to get the talks back on track, but the imposition of additional tariffs by the U.S. later this week could keep the talks derailed for a while to come.»

Despite his negative comments, Mr. Lighthizer said high-level talks with Chinese negotiators were expected to continue Thursday and Friday in Washington. The talks were originally scheduled to resume Wednesday, but Mr. Trump’s threat of new tariffs Sunday caused a delay as Beijing weighed canceling the talks.

Mr. Mnuchin said some concerns arose last week when he and Mr. Lighthizer were in China for talks. «There were some signs of that when we were in Beijing,» Mr. Mnuchin said. «We were reassured that things were moving forward.»
Then over the weekend, he said, communications from Chinese officials indicated the talks were going «substantially backward» from the U.S. perspective.

«We are not willing to go back on documents that have been negotiated,» Mr. Mnuchin said.

The two officials declined to specify areas where they think the Chinese side as backtracking. «There was concern about the form of the agreement and a redrafting of it» that would pull back from important commitments, Mr. Lighthizer said.

A spokesman for the Chinese Embassy in Washington didn’t immediately respond to a request for comment on the talks Monday.

People in Washington following the talks believe China became less willing to make concessions after the recent Beijing conference on China’s Belt and Road infrastructure initiative, which was attended by about 40 heads of state.

The conference gave a boost to those in the government and ruling Communist Party who contend that Beijing was conceding too much to the U.S., given how much global growth depends on China.

According to White House officials, the dispute revolves in part around how a final deal would be presented to the public. The U.S. wants to publish full details of the pact, while China just wants to release a summary of the terms, one of the officials said.

According to another person following the talks, the full trade agreement as now envisioned would require China to change its laws to implement it, something Beijing is reluctant to do.

Along with the transparency and legal force of the deal, another sore spot continues to be China’s goal of seeing tariffs U.S. lifted, according to one of the White House officials.

«There is a real desire on our end to keep the tariffs on,» this person said. «That is a sticking point.»

Mr. Trump sees his administration as negotiating from a position of strength, founded on a rock-solid U.S. economy. Gross domestic product in the first quarter rebounded from the end of 2018, with growth clocking in at a seasonally adjusted annualized rate of 3.2%, up from 2.2% the prior quarter.

The jobs report for April, released on Friday, showed the U.S. economy adding a robust 263,000 jobs in April and the unemployment rate falling to 3.6%, the lowest in nearly 50 years.

Those results have even some of Mr. Trump’s staunchest critics, including Senate Democratic leader Chuck Schumer of New York, supporting the president’s hard line on China.

So far, the tariffs have hardly put a dent in the U.S. economy. But imposing tariffs of 25% on nearly all Chinese imports — as threatened by Mr. Trump — could reduce U.S. growth by 0.3 percentage point, enough to slow U.S. growth to below 2% by the end of 2019, according to Gregory Daco, chief U.S. economist of Oxford Economics, a global research firm.

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