On June 27, 2019, Wendy Wu, Mark Magnier, Doug Palmer and Owen Churchill write on South China Morning Post:
Presidents Donald Trump and Xi Jinping are to meet this week in Osaka. Photo: AP
This story is part of an ongoing series on US-China relations produced jointly by the South China Morning Post and POLITICO, with reporting from Asia and the United States.
The US and China have tentatively agreed to another truce in their trade war in order to resume talks aimed at resolving the dispute, sources familiar with the situation said.Details of the agreement are being laid out in press releases in advance of the meeting between Chinese President Xi Jinping and US President Donald Trump at the Group of 20 summit in Osaka, Japan, this weekend, according to three sources – one in Beijing and two in Washington.Such an agreement would avert the next round of tariffs on an additional US$300 billion of Chinese imports, which if applied would extend punitive tariffs to virtually all the country’s shipments to the United States.
The Trump administration has threatened to slap duties of up to 25 per cent on the remaining untaxed Chinese goods if this weekend’s talks go poorly.
One source with knowledge of the planning said Trump’s decision to delay additional tariffs was Xi’s price for holding the meeting in Osaka.SUBSCRIBE TO SCMP TODAY: INTL EDITIONGet updates direct to your inboxSUBMITBy registering for these newsletters you agree to our T&C and Privacy Policy
“The reality, though, is President Trump could always have a change of heart,” the source said. “But the truce cake seems to have been baked.”
Neither the White House nor the Office of the US Trade Representative had any comment on the reports.
Trump reiterated on Wednesday that he was prepared to impose additional tariffs on China if the talks in Osaka failed, but suggested additional duties could start at 10 per cent.
A senior Trump administration official told POLITICO earlier this week that it was possible that tariffs could be delayed but cautioned that “nothing is certain. Absolutely nothing.”
It is unclear whether Trump will give any sort of deadline for the talks to reach an agreement, as he had before. Two sources suggested a deadline of six months, which would put the deadline at the end of the year.
Since the trade war started nearly a year ago, Trump has imposed 25 per cent tariffs on US$250 billion worth of Chinese goods.
A Washington-based source familiar with the talks said that there were “ongoing attempts to coordinate press messaging”, but added that there was no specificity yet regarding decisions on tariffs or timing within that messaging.
The person, speaking on condition of anonymity, said that both sides would be expected to release coordinated press releases following the summit as opposed to one joint statement.
Such a strategy would align with that which followed the two presidents’ last sit-down after a G20 meeting in Buenos Aires in December, which resulted in a three-month pledge to pause further tariff escalation.
The stakes were even higher this time after Trump promised to subject all Chinese imports to new tariffs.
The language of any statements coming out of Saturday’s meeting – whether via a joint communique or separate statements – is certain to be subject to the same level of intense inspection.
After the dinner meeting in Buenos Aires, both sides released their own statements, which, while generally consistent, differed on a number of crucial details, prompting immediate scrutiny among analysts seeking to shed light on the closed-door talks.
Missing from Beijing’s statement, for example, was any mention of the 90-day deadline for both sides to reach a deal before higher US tariffs kicked in. And while the White House statement said China had agreed to immediately restart agricultural purchases, there was no such commitment in the Chinese version.
Gary Reber Comments:
For decades now, free trade and open markets have put the United States, as a country, at a disadvantage as American corporations have moved their manufacturing and investment to slave-wage labor countries, boosting their ability to use and apply and innovate technologically. Now, we find ourselves growing more dependent on such countries, indeed authoritarian- or communist-governed countries, in this case Communist China.
While jobs have been created, especially in slave-wage labor countries and less so in the United States, we have gutted our manufacturing capabilities at home, resulting in millions of jobs destroyed as a result of this manufacturing migration out of the United States. Of course, the relatively few owners have benefited tremendously as a result of being able to produce at less cost, while seeking global markets with “customers with money” to buy what they are producing.
Of course, business groups, who represent essentially the 1 percent wealthy capital asset ownership class, want to maintain free trade interactions to maximize their profits in both countries and other slave-wage labor countries. They will look for loopholes and demand exceptions to protect their profitability margins and cost advantages producing outside the United States provides.
At some point (now is good starting time before it is too late) we need to reclaim our manufacturing capability and our ability to innovate and invest in America for the benefit of the American people, not the few who comprise the wealthy capital asset ownership class (whether residing in the United States or in other countries).
President Donald Trump will probably cave to the growing political pressures from his supporters in the business sectors that are benefiting from free trade with slave-wage labor authoritarian/communist countries. All of our politicians are lacking a strong vision for building within our own country a technologically advanced and environmentally responsible future economy that can support general affluence for EVERY citizen, not just the few.
We need to use the powers of the Federal Reserve to provide interest-free capital credit to EVERY child, woman and man, to invest in viable corporations growing our economy, both established and start-ups, with the debt solely repayable with the earnings of the investments. We need to break from the growing dependence on foreign business owners and short-term profit-seek American business owners and become self-sufficient in our manufacturing capabilities to the greatest extent possible and engage in fair trade that respects technological patents.
I do believe that this is one of the greatest challenges we face going forward.
