After the news-cycle-swallowing Singapore summit provided a brief respite from focus on the US-China trade dispute, the shower of headlines on a possible tariff battle between the world’s two largest economies has resumed.
The play by play, thus far
The Trump administration announced early this year that it would impose tariffs on US$50 billion worth of Chinese intellectual property-intensive imports to the US.
China responded that it would match such tariffs, dollar for dollar, after which US President Donald Trump upped the ante in an official memo to $150 billion.
Since the tariff threats, three rounds of trade negotiations have taken place, during which news emerged that China has agreed in principle to increase purchases of US energy and agriculture products as part of a negotiated settlement. The Trump administration also indicated that tariffs were temporarily off the table and agreed to grant a reprieve to Chinese telecommunications giant ZTE, after having placed a ban on sales of US components to the firm.
Ahead of the third round of trade negotiations, which took place in Beijing late last month, the Trump administration put tariffs back on the table. In an announcement ahead of US Commerce Secretary Wilbur Ross’ visit to Beijing for the talks, the White House said it would formally release a list of Chinese products to be hit with tariffs on June 15. The tariffs would be imposed “shortly thereafter.”
Politico is reporting this week that according to two sources briefed on internal deliberations, the tariffs on Chinese goods could be imposed “as soon as Friday or next week.”
The report also made reference to comments from Trump after his summit with Kim Jong-un which appeared to be in reference to tariffs.
“[Trump] said Beijing has not done an adequate job closing its border to trade with North Korea in recent months, which Trump seemed to blame for rising US-China trade tensions.
“’Which is a shame. But I have to do it. I have no choice. For our country, I have to do it,’ Trump said at a press conference in Singapore, possibly referring to tariffs.”
Lawmakers confident they can block ZTE deal
In a separate development, which does not bode well for a US-China trade settlement, The Wall Street Journal is reporting that senior Republican senators are confident Trump will not veto a bill to block his reprieve for ZTE.
The deal to lift the ban on chip sales to ZTE – seen as essential to the firm’s survival – was said to be a precondition for any trade deal with China.
“’I don’t think the president cares about ZTE,” Senator Bob Corker (Republican, Tennessee) told reporters. “Someone told me that he gave [Republican lawmakers] a wink and a nod and told them he didn’t care. I don’t know if that’s true or not, but I think he did what he did for the Chinese leader but he doesn’t really care what Congress does.’
“Meanwhile, ZTE shares resumed trading in Hong Kong on Wednesday morning after a halt of almost two months, plunging about 40% in the opening minutes – wiping out nearly $8 billion in market value – as investors remain uneasy about the future of the company.”