No clarity on US-China trade as North Korea summit looms
Deal may be in limbo until after Trump-Kim meeting
US Commerce Secretary Wilbur Ross went to Beijing over the weekend to talk trade, and the result was left to interpretation. Most headlines suggested that a cold warning from China on tariffs, and the lack of any joint statement, meant a trade war is imminent
By the White House’s account, released on Monday, nothing has been decided, but a deal on reducing the bilateral trade deficit is still in the works.
“The meetings focused on reducing the United States’ trade deficit by facilitating the supply of agricultural and energy products to meet China’s growing consumption needs, which will help support growth and employment in the United States,” the bland statement posted to the White House website read.
“The delegations will now report back to receive guidance on the path forward.”
Apparently, the US president hasn’t had time for a briefing on the fate of the world’s most important bilateral trade relationship yet.
That last statement can be read in the context of an announcement last week that tariffs on US$50 billion in Chinese goods will be proposed on June 15. The duties will be implemented “shortly thereafter,” the statement said.
The timing of the tariff proposals puts it immediately following Trump’s June 12 meeting with North Korean leader Kim Jong-un. Analysts – along with the Trump administration – have linked the US-China trade relationship with Beijing’s cooperation in applying pressure on the Kim regime and achieving denuclearization. Trump has himself suggested that Chinese President Xi Jinping had influenced a statement from North Korea following Kim’s second visit to China.
With the Trump White House focusing attention on the North Korea summit, now just a week away, a decision on a deal with China on trade may be on the backburner.
The Diplomat wrote, “with the start date looming for US tariffs on Chinese goods, the latest round of US-China trade discussions — possibly the last before tariffs take effect — ended without a breakthrough.”
Despite such reports warning that the real US-China tariff battle is finally set to begin, there is no timetable for an imposition of tariffs (unless “shortly thereafter” constitutes a timetable), should they be announced next week.
The announcement last week, and a coming list of proposed products, is just the latest in a long line of moves that Trump administration cabinet members including Wilbur Ross, economic advisor Larry Kudlow, and Treasury Secretary Steven Mnuchin have all suggested were leverage for negotiations. If tariffs were the ultimate policy goal, as suggested by trade advisor Peter Navarro, they would already have been imposed.
The focus of the trade talks on reducing the deficit with deals to sell China more natural gas and agriculture products, as indicated in the White House statement, confirmed that the administration has stepped back from trying to get China to make big changes to its industrial policy.
The failure to come to a deal over the weekend, more than a sign that the tariffs are coming, might more likely be a sign that the White House is waiting to see how the Kim summit shakes out.