China to counter latest U.S. tariffs as Trump vows deal on U.S. terms

Containers are seen at Yantian port in Shenzhen, Guangdong province, China July 4, 2019. Picture taken July 4, 2019. REUTERS/Stringer

BEIJING/WASHINGTON (Reuters) – China on Thursday vowed to counter the latest U.S. tariffs on $300 billion of Chinese goods but called on the United States to meet it halfway on a potential trade deal, as U.S. President Donald Trump said any pact would have to be on America’s terms.

The Chinese finance ministry said in a statement that Washington’s tariffs, set to start next month, violated a consensus reached between Trump and Chinese President Xi Jinping at a June summit in Japan to resolve their disputes via negotiation.

In a separate statement, China’s foreign ministry spokeswoman, Hua Chunying, said, “We hope the U.S. will meet China halfway, and implement the consensus of the two heads of the two countries in Osaka.”

China hopes to find mutually acceptable solutions through dialogue and consultation on the basis of equality and mutual respect, she added.

Trump, who is seeking re-election in 2020 and had made the economy and his tough stance on China a key part of his 2016 campaign for the White House, on Thursday said any agreement must meet U.S. demands.

“China, frankly, would love to make a deal, and it’s got to be a deal on proper terms. It’s got to be a deal, frankly, on our terms. Otherwise, what’s the purpose?” Trump said in an interview on New Hampshire radio station WGIR.

The trade picture is further complicated by continuing unrest in Hong Kong, which Trump on Wednesday tied to any possible agreement, saying Xi must first work out the situation in the territory with protesters.

On Thursday, he used Twitter to call on the Chinese president to personally meet with protesters to spur “a happy and enlightened ending to the Hong Kong problem.”

Trump and Xi in June had agreed to restart trade talks after negotiations stalled earlier this year. But earlier this month, the Trump administration said it would slap duties beginning Sept. 1 on $300 billion of Chinese goods, which would effectively cover all of China’s exports to the United States.

Trump backed off part of the plan this week, delaying duties on certain items such as cellphones, laptops and other consumer goods, in the hopes of blunting their impact on U.S. holiday sales. Tariffs will still apply to those products starting in mid-December.

The move has roiled global markets and further unnerved investors as the trade dispute between the world’s two largest economies stretches into its second year with no end in sight.

China’s threat to impose countermeasures further sent global stocks sprawling on Thursday with oil also deepening its slide over recession fears, although U.S. stocks opened higher on Thursday amid strong retail sales data.

Trump, in his radio interview on Thursday, dismissed investors’ worries.

“We had a couple of bad days but … we’re going to have some very good days because we had to take on China,” he told WGIR.

(Reporting by Beijing Monitoring Desk; additional reporting by Susan Heavey and Makini Brice in Washington; Editing by Clarence Fernandez and Jonathan Oatis)

Trump says no hurry to sign China deal as trade war escalates

A general view of Kwai Tsing Container Terminals for transporting shipping containers in Hong Kong, China July 25, 2018. REUTERS/Bobby Yip

By Susan Heavey and Yawen Chen

WASHINGTON/BEIJING (Reuters) – U.S. President Donald Trump on Friday said he was in no hurry to sign a trade deal with China as Washington imposed a new set of tariffs on Chinese goods and negotiators entered a second day of last-ditch talks to try to salvage an agreement.

The United States early on Friday increased its tariffs on $200 billion in Chinese goods to 25% from 10%, rattling financial markets already worried the 10-month trade war between the world’s two largest economies could spiral out of control.

The move, which is expected to lead China to retaliate, went into effect just hours after U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He ended a first day of talks in Washington without a deal.

They resumed negotiations on Friday morning.

In a series of morning tweets, Trump defended the tariff hike and said he was in “absolutely no rush” to finalize a deal, adding that the U.S. economy would gain more from the levies than any agreement.

“Tariffs will bring in FAR MORE wealth to our country than even a phenomenal deal of the traditional kind,” Trump said in one of the tweets.

Despite Trump’s insistence that China will absorb the cost of the tariffs, U.S. businesses will pay them and likely pass them on to consumers.

Global equities sagged after his comments. MSCI’s All-Country World Index, which tracks stocks across 47 countries, was down 0.8% in London. U.S. stock indexes, which have fallen sharply this week, opened lower again

Trump, who has adopted protectionist policies as part of his “America First” agenda and railed against China for trade practices he labels unfair, said the trade talks, originally due to last two days, could drag on beyond this week.

“We will continue to negotiate with China in the hopes that they do not again try to redo deal!” said Trump, who has accused Beijing of reneging on commitments it made during months of negotiations.

Following the U.S. tariff hike, China’s Commerce Ministry said it would take countermeasures but did not elaborate.

The ministry said it “hopes the United States can meet China halfway, make joint efforts, and resolve the issue through cooperation and consultation.”

‘RUSSIAN ROULETTE’

Under the latest U.S. action, U.S. Customs and Border Protection imposed a 25% duty on more than 5,700 categories of products leaving China after 12:01 a.m. EDT (0401 GMT) on Friday.

Seaborne cargoes shipped from China before midnight were not subject to the new tax as long as they arrived in the United States prior to June 1. Those cargoes will be charged the original 10% rate.

“This delay might create an unofficial window during which the U.S. and China can continue to negotiate,” investment bank Goldman Sachs wrote in a note, adding that it was a “somewhat positive sign” that talks were continuing.

Trump gave U.S. importers less than five days notice about his decision to increase the rate on $200 billion worth of goods, which now matches the rate on a prior $50 billion category of Chinese machinery and technology goods.

He has also threatened to impose new tariffs on another $325 billion in Chinese imports.

Investors worry that an escalating trade war could further damage a slowing global economy. The higher tariffs could reduce U.S. gross domestic product (GDP) by 0.3% and China’s by 0.8% in 2020, consultancy Oxford Economics said.

“There is no greater threat to world growth,” French Finance Minister Bruno Le Maire said on Friday.

Many business groups have opposed the tariffs, saying they will be disastrous for companies and lead to higher prices for consumers across a range of products.

Gary Shapiro, chief executive of the Consumer Technology Association, said the tariffs would be paid by American consumers and businesses, not China, as Trump has claimed.

“Our industry supports more than 18 million U.S. jobs, but raising tariffs will be disastrous,” Shapiro said in a statement.

It may take three or four months for American shoppers to feel the pinch but retailers will have little choice but to raise prices to cover the rising cost of imports before too long, economists and industry consultants say.

Mats Harborn, president of the European Union Chamber of Commerce in China, said: “European companies are watching aghast as the U.S. and China play Russian roulette with the world economy.”

RETALIATE HOW?

The biggest Chinese sector affected by the latest tariff increase is a $20 billion-plus category of internet modems, routers and other data transmission devices, followed by about $12 billion worth of printed circuit boards used in a vast array of U.S.-made products.

Furniture, lighting products, auto parts, vacuum cleaners and building materials also are high on the list of products subject to increased duties.

Just hours after the U.S. move, which will add pressure on an already slowing Chinese economy, China’s central bank said it was fully able to cope with any external uncertainty.

On Monday, the People’s Bank of China cut the amount of reserves that some small and medium-sized banks need to hold, freeing up funds for lending to cash-strapped businesses.

James Green, a senior adviser at McLarty Associates who until August was the top USTR official at the embassy in Beijing, said he expected China would increase non-tariff barriers on U.S. firms, such as delaying regulatory approvals.

“I think the Chinese, in the end, will want to keep negotiations going. The question is: ‘where do they go for retaliation?'” he said.

Even without the trade war, China-U.S. relations have continued to deteriorate, with an uptick in tensions over the South China Sea, Taiwan, human rights and China’s plan to re-create the old Silk Road, called the Belt and Road Initiative.

(Reporting by David Lawder in Washington, and Yawen Chen, Michael Martina, Ryan Woo, Ben Blanchard and Kevin Yao in Beijing, and Xihao Jiang in Shanghai; Writing by Paul Simao; Editing by Simon Cameron-Moore, Kim Coghill and Bill Trott)