Chinese stocks traded on US exchanges went from modest losses to modest gains after The Wall Street Journal reported that the Trump administration will open a new round of trade talks with China before imposing additional tariffs. According to the newspaper:
“The US is reaching out to China for a new round of trade talks, in an effort to give Beijing another opportunity to address trade issues before the Trump administration implements additional tariffs on Chinese imports, according to people briefed on the matter.
“Senior US officials, led by Treasury Secretary Steven Mnuchin, recently sent an invitation to Chinese counterparts headed by Vice Premier Liu He, proposing another bilateral trade meeting, the people said.
“The US side has proposed having discussions in the coming weeks and has asked the Chinese to dispatch a ministerial-level delegation. The proposed meeting might take place in Washington or Beijing, the people said.
“A Treasury Department spokesman declined to comment.
“The proposal comes as the Trump administration is gearing up to impose tariffs on an additional $200 billion of Chinese goods, after imposing tariffs on $50 billion in Chinese goods earlier this year. The invitation to negotiate reflects the attempt by some in the administration to ‘make every effort to get the Chinese to address the U.S. demands before the tariffs hit,’ one of the people said.”
The American initiative follows extensive lobbying by American businesses against Trump’s tariffs. A new coalition named Americans for Free Trade will act as an umbrella group for US manufacturers, retail and agricultural businesses to lobby against Trump under the slogan, “Tariffs hurt the heartland.”
The United States imports US$500 billion worth of Chinese-made goods each year, although a large part of the total reflects assembly of Japanese, Korean or Taiwanese components. A large part of this trade also comes from American-owned plants in China. American businesses cannot replace many of the import products due to lack of skilled labor or available supply chain and would have to absorb the cost of tariffs or pass them on to customers.