Trump administration U.S./China relations May 2019 –

Written by  //  September 2, 2019  //  China, Trade & Tariffs, U.S.  //  No comments

Trump administration U.S./China relations 2016 – April 2019
The US-China trade war: 5 essential reads

1 – 2 September
China launches WTO case against U.S. tariffs
(CBC) The latest tariffs actions violated the consensus reached by leaders of China and the U.S. in a meeting in Osaka, the Commerce Ministry said in the statement. China will firmly defend its legal rights in accordance with WTO rules, it said.
The U.S. under the Trump administration has said the WTO is making trade unfair for American companies and is blocking attempts to appoint new people to a panel to adjudicate cases as it takes an increasingly protectionist stance.
Trump can’t afford to win any more trade wars
The president’s team are wrong on all counts when it comes to China and are fighting a losing battle
(Asia Times) How can Trump’s China team be so far off in misreading the strength of China’s economy? Because they are lulled by the complacent feeling that America remains exceptional, that China only knows how to steal and copy and further that China will grovel when faced with the threat of tariffs. They are wrong on all counts.
Trade negotiator Robert Lighthizer, a trained lawyer, doesn’t know much about economics and believes that the only way to reduce the trade deficit with China is to levy tariffs on imports from China. Trump’s China advisor Peter Navarro never knew much about China and quite willingly pretended that he doesn’t know much about economics either – just like his boss.That way he can stroke Trump’s ego with the line of nonsense that a trade war with China is easy to win.
The Trump China team never bothered to find out what’s going on in China. If they had, they would realize total foreign direct investments into China in the first half of 2019 actually increased by 1.5% from the previous year. In other words, companies are not backing out but continue to invest in China because, unlike Trump, they believe in China as an attractive place to do business.
China’s GDP increased by 6.5% last year, only 1.5% was due to exports – and obviously exports to America contributed only a fraction of that. In other words, exporting to the US wasn’t as important to China’s economy as Trump had imagined.
Trump’s only strategy to counter China is to levy more tariffs and threaten to levy more. He has publicly asserted repeatedly that tariffs collected is “free” money being paid by China.
Someone needs to tell him that the free money is hurting the American consumer by raising the cost of goods and draining the American pocketbook. The money isn’t free and not coming from China.
As Trump Escalates Trade War, U.S. and China Move Further Apart With No End in Sight
By Ana Swanson
(NYT) President Trump’s trade war with China entered new territory on Sunday as his next round of tariffs took effect, changing the rules of trade in ways that have no recent historic precedent and driving the world’s two largest economies further apart.
American tariffs on foreign goods had already climbed higher than any time since the 1960s before Sunday, when the United States imposed a new 15 percent tariff. The levies on food, clothing, lawn mowers and thousands of other “Made in China” products come as the president prepares to tax nearly everything China ships to America.
China has responded by raising barriers to American companies and their products, while easing them for other nations.
American companies that once believed the trade war would blow over are now scrambling to limit their exposure to China, in some cases shifting production to other countries, like Vietnam, to avoid tariffs that will soon reach as much as 30 percent.

25 August
Mixed messages from Trump on China trade war during G7
(Global news) Injecting fresh uncertainty at a time of global economic jitters, President Donald Trump sent mixed messages Sunday on the U.S.-China trade war as leaders at a global summit pushed the unpredictable American president to ease frictions over tariffs and co-operate on other geopolitical challenges. Trump’s head-snapping comments at the Group of Seven summit about his escalating trade fight with China — first expressing regret, then amping up tariff threats — represented just the latest manifestation of the hazards of the president’s go-it-alone mantra. Allies fault his turbulent trade agenda for contributing to a global economic slowdown.
Two days after the U.S. and China traded a fresh round of retaliatory tariffs and Trump threatened to force U.S. businesses to cut ties with China, the president appeared to harbour qualms about the trade war, which has sent financial markets tumbling.

23 August
Trump Is Melting Down Because China Won’t Give In on Trade
By Jonathan Chait
President Trump is in the midst of a public meltdown that is humiliating, scary, and banana republic–y even by Trumpy standards. The reason is that Trump started a trade war and China refuses to back down, having announced this morning that it is imposing retaliatory tariffs on $75 billion worth of U.S. goods.
Trump is pressuring China with tariff threats, on the theory that China, which is more export-dependent than the U.S., has more to lose from a trade war. China, apparently, calculates that it is Trump who has more to lose from a trade war, since he is facing reelection next year and Chinese president Xi Jinping is facing reelection … never. What’s more, China has little incentive to cough up permanent concessions in its trade relations with the U.S., given that there’s a better-than-even chance Trump will lose and it can just wait for the next president.
This has provoked one of Trump’s wilder public tantrums. First, he has lashed out at Federal Reserve chair Jay Powell, who has become Trump’s scapegoat for bad economic news despite the fact that it was Trump who appointed him to the job. (“Trump installed a Fed chair who is singlehandedly destroying the economy” sounds like an attack on Trump, but oddly enough it is Trump’s own argument.)

14 August
Bloomberg Politics: Did U.S. President Donald Trump just blink in his trade war with China?
His move to delay new tariffs on a wide range of consumer products … until December suggests an awareness of the impact the penalties are having on American consumers, companies and markets, and potentially on his campaign for re-election next year.
Tellingly, he said the decision was made “so it won’t be relevant to the Christmas shopping season” — a swing from his previous position that China alone bears the cost of the tariffs.
Still, that doesn’t mean there’s a sudden improvement in the atmosphere surrounding the trade talks. While the announcement came after senior officials spoke by phone — “very productive,” Trump said — few expect any breakthrough soon.
Indeed, Beijing may sense its best option is to wait Trump out as the election approaches and his farming base feels the pain of losses in agricultural sales to China.
Trump delays tariffs on Chinese cellphones, laptops, toys; markets jump
(Reuters) Trump’s 10% tariffs will be effective from Dec. 15 for thousands of products including clothing and footwear, possibly buttressing the holiday selling season from some of the fallout from the protracted trade spat between the world’s two largest economies.

6 August
Thomas Friedman: How Trump and Xi Can Make America and China Poor Again;
The trade war is heading in a dangerous direction for the whole world.
If President Trump and President Xi Jinping don’t find a way to defuse it soon, we’re going to get where we’re going — fracturing the globalization system that has brought the world more peace and prosperity over the last 70 years than at any other time in history. And what we’ll be birthing in its place is a digital Berlin Wall and a two-internet, two-technology world: one dominated by China and the other by the United States.
This will be a much more unstable and less prosperous world.

1 – 4 August
China lets yuan break key 7 level for first time in decade as trade war worsens
(Reuters) – China let the yuan breach the key 7-per-dollar level on Monday in a sign Beijing might be willing to tolerate more currency weakness that could further inflame a trade conflict with the United States.
The sharp 1.4% drop in the yuan comes days after U.S. President Donald Trump stunned financial markets by vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, abruptly breaking a brief ceasefire in a bruising trade war that has disrupted global supply chains and slowed growth.
Some analysts said the yuan move could unleash a dangerous new front in the trade hostilities – a currency war.

Brett House on China, America and the global economy (CTV video)

Secretary of State Mike Pompeo and China’s top diplomat Wang Yi met face-to-face for the first time this year and Wang said they discussed ways to promote China-U.S. ties despite “recent disturbances”. The words contrasted with the scorn Chinese officials have heaped on Pompeo recently, with U.S.-Chinese ties souring on multiple fronts, from a trade war to U.S. sanctions on Chinese telecoms giant Huawei to Taiwan and the South China Sea.

18 July
Donald Trump hears ‘tough’ details of China’s Xinjiang camps as he meets detained Uygur scholar Ilham Tohti’s daughter
US president has first public meeting with anyone from China’s Uygur community, and makes first remarks on their internment
Action needed on China, he is told as he also meets Falun Gong practitioner and Tibetan Buddhist at gathering of victims of religious persecution
(SCMP) Trump appeared not to know in detail about the internment camps in Xinjiang – which are believed to have begun in early 2017 – asking Ilham where in China the camps were located.
The president also heard accounts from Yuhua Zhang, a practitioner of the spiritual movement Falun Gong whose husband is detained in China, and Nyima Lhamo, a Tibetan Buddhist whose uncle died while imprisoned in Sichuan.
At the same time, however, the US administration has held up economic sanctions against Chinese officials over the camps for fear of derailing progress in trade negotiations with Beijing.

11 July
A Koch Executive’s Harassment in China Adds to Fears Among Visitors
(NYT) Amid worsening trade tensions, an American businessman was barred from leaving for days, in an apparent message to President Trump. Others worry they may be next.
A Koch Industries executive was told he could not leave China. An ex-diplomat who helped organize a technology forum in Beijing was hassled by authorities who wanted to question him. An industry group developed contingency plans, in case its offices were raided and computer servers were seized.
Business executives, Washington officials and other frequent visitors to China who were interviewed by The New York Times expressed increasing alarm about the Chinese authorities’ harassment of Americans by holding them for questioning and preventing them from leaving the country.
“In a very not-so-subtle manner, the Chinese government has upped the ante by detaining Americans at the borders and at their hotels, and with the obvious intent to send a message to the Trump administration that they can engage in hostage diplomacy if push comes to shove,” said James Zimmerman, a partner in the Beijing office of the law firm Perkins Coie, which works with American companies in China.

3 July
Writing in the South China Morning Post, Kevin Rafferty takes a very different position from the enthusiastic Bloomberg view below.
Xi occupies an especially ambivalent place in Trump’s world. Personally, Trump lavished praise on Xi as “a brilliant leader” with whom he had warm conversations. The grimly bemused look on Xi’s face told a different story. Surely, Xi would be forgiven for his suspicions that at the back of Trump’s mind is a great power struggle, and possibly provoking regime change in China.
There was no need for Trump’s elaborate charade of meeting Xi in Osaka, at the end of which he declared a truce, with no more tariffs on Chinese goods while the two countries resumed talks. His announcement of a partial lifting of the ban on US exports to controversial telecoms company Huawei raised questions of whether concerns about Huawei are really related to security. Or are they commercial concerns on which Trump is using US state power against Chinese companies, in a mirror play of accusations against Beijing?
Common sense would have seen the trade truce announced long before, so that the Osaka summit could stimulate discussion of myriad global trade, economic and political and social issues, not least the threat to the Earth’s existence from climate change.

1 July
Ryan Hass: What the US and China each got out of the Trump-Xi meeting in Japan
This list is illustrative, not exhaustive. It is intended to highlight the dynamic nature of the U.S.-China relationship. With political will, pragmatism, and determination, a trade deal remains within reach for both leaders. Such an outcome is far from a foregone conclusion, though.

29 June
Bloomberg commentary:
Did Xi Jinping and Donald Trump just get a win-win?
The presidents of the world’s two biggest economies today struck a truce in their trade war, meeting on the sidelines of the Group of 20 summit in Osaka, Japan. It’s the second time they’ve used their personal rapport (Trump called the Chinese leader a “great leader” and friend) to revive talks after an impasse.
The biggest takeaways: The truce is open-ended, giving both sides some breathing space. Trump is willing to let U.S. companies again sell some products to Chinese tech giant Huawei. And he’s leaving a bigger decision on the fate of the company, which the U.S. has called a national security threat, until the end of the broader trade talks.
Trump, with an eye on re-election, spoke repeatedly in Osaka about how getting a deal with China on trade would benefit U.S. farmers. Xi, meanwhile, gets a reprieve on a trade war that’s damaging his economy and can talk up his negotiating credentials at home.
But there are still risks in a high-stakes game for the global economy.
The 2020 vote will play a big role in how things move forward. Trump has bet so far the economy — and stock market — will hold up despite the trade tensions. And Xi must decide whether he would get a better deal with Trump or potentially one of the Democratic candidates, many of whom are advocating an even harder line on China. – Rosalind Mathieson

24 June
China, US agree to resume trade talks in phone call ahead of Xi-Trump G20 meeting
Chinese Vice-Premier Liu He speaks to US’ Robert Lighthizer and Steven Mnuchin on Monday, Chinese state media says
Presidents Xi Jinping and Donald Trump are expected to meet on the sidelines of this week’s G20 summit in Japan

(SCMP) The top trade negotiators for China and the United States have agreed to resume discussions to resolve their trade dispute, making the commitment in a phone conversation on Monday ahead of high-stakes talks between the two countries’ presidents in Japan this week.

19 June
China Is Cutting Tariffs—For Everyone Else
(The Atlantic) As Trump focuses on disruption, Beijing is evidently operating on a higher level.
Trump started the trade war by levying new taxes on $250 billion worth of Chinese exports. China retaliated both by increasing the duties Americans face and by decreasing the tariffs that confront everyone else: It has cut tariffs on thousands of products from the rest of the world’s fisheries, farmers, and firms.
Even as Tariff Man, as Trump likes to refer to himself, focuses only on disruption, Beijing is evidently operating on a higher level. China is outplaying the United States on two fronts.
First, while Trump is on the verge of slapping tariffs on almost everything the U.S. imports from China, Beijing is picking and choosing wisely. It went to town on American soybeans, in part because it knew that Brazil and Argentina could provide ample alternative supplies. But it has left untouched other American exports that are more difficult to replace.
Second, Trump has no real mitigation strategy to help the Americans facing the entirely foreseeable costs of his policies. Yes, he’s giving out tens of billions of dollars in agricultural subsidies—but that is, of course, a cost borne by Americans, not international rivals. His separate trade restrictions on nearly $50 billion in steel and aluminum imports have only worsened the effects of his fight with China; these restrictions have burdened American farmers by raising the cost of the equipment needed for harvesting or storing the crops they are now unable to sell abroad.

12 June
Trump, tariffs and how to start a war
by Gwynne Dyer
THE best way to deal with Donald Trump, especially if you are a foreign government negotiating trade issues, is to give him a little win.
… China is in an extremely vulnerable position. Its exports to America are worth almost three times as much as US exports to China, so it really cannot afford to lose the US market. Chinese President Xi Jinping should just give Trump enough to make him happy – he’s easily pleased – and move on to the next problem.
To the extent that Donald Trump calculates his moves beforehand, this would have been his calculation, and it is logically correct. But it didn’t work out that way: after a year of escalation and counter-escalation, the two countries are nearing the point where they will have imposed 25 per cent tariffs on all of each other’s exports. What went wrong?
Trump issued his usual threats and was the first to escalate at every step of the dance, but if the Mexicans and the Canadians can work around his histrionics, why can’t the Chinese?
Maybe it’s just pride: Xi simply can’t abide the vision of Trump capering with joy as he celebrates his victory over the Chinese. Or maybe it’s fear: letting Trump have a victory (and a real one, this time) would so humiliate Xi in the eyes of his own colleagues and rivals that his own position would be in danger.

7 June
Kevin Rudd: Trump hands China an easy win
How the the US president’s tough rhetoric in the trade war plays into Chinese economic nationalism
(IPS Journal) When President Trump tweeted on 5 May that the China trade deal was off, the historical echoes in Beijing were loud and clear. Almost exactly 100 years earlier, China’s ‘May Fourth Movement’ of 1919 was a direct response to the actions of President Woodrow Wilson at the end of World War I. Wilson had promised China, an American ally, that German colonies in Shandong would be returned to Chinese sovereignty, but instead handed them to Japan. China exploded with anti-American, nationalist sentiment. One of the eventual consequences was the establishment of the Chinese Communist Party, which for the last 70 years has ruled the country.
Thus, Mr Trump has handed Xi Jinping a remarkably effective nationalist card to play at a time when he has been under pressure at home because of a slowing economy. The Chinese media is now full of accounts of the country’s economic resilience and appeals to patriotism, even invoking the spirit of the Korean War, when, according to the official narrative, China was able to stare down the vastly superior American military.
Days after the president’s tweets, China listed three ‘red lines,’ positions the United States had taken in the trade talks that were unacceptable. .. These ‘red lines’ were new. Before that, China’s negotiating team had a fully flexible remit from the leadership. But not anymore. Now that these three lines are in the public domain, there is no way Chinese leaders can yield on them. The leaks of large parts of the negotiating text to the American news media has added a new level of toxicity, making it virtually impossible to return to the existing text as a basis of negotiations.

19 May
As Trump escalates China trade dispute, economic ties lose stabilizing force in matters of national security
(WaPo) The United States for years relied on economic interdependence with China as a stabilizing force in relations with Beijing, with business between the two nations forming what former treasury secretary Hank Paulson used to call the “ballast” in U.S.-China affairs.
But as President Trump escalates his trade dispute with Chinese President Xi Jinping, there is a realization that those days are gone. The result is a reduced incentive for stability and restraint in Washington when it comes to China, raising the possibility that tensions could extend beyond the trade sphere and impact other areas of contention, including Taiwan or the South China Sea.
The Trump administration has sent mixed messages about what it is seeking to achieve long term with its trade and national security policies on China. Some officials, including Trump at times, suggest economic ties with China will continue apace and possibly even deepen, so long as Beijing agrees to new, fairer rules. Others emphasize American resolve to restrain China’s unfair expansionism and end the economic linkages that have been fueling its rise.

16-17 May
Reuters: The United States must show sincerity if it is to hold meaningful trade talks, China said after President Trump dramatically raised the stakes with a potentially devastating blow to China’s Huawei. Beijing has yet to say whether or how it will retaliate to the latest escalation in trade tensions, which saw Washington put the telecoms equipment giant on a blacklist that will make it difficult for it to do business with U.S. companies. Over the last month the U.S.-China trade war has boosted the risk of a U.S. recession, say a strong majority of economists polled by Reuters, who now put the chances of that happening in the next two years at 40%.

Blacklisting Huawei takes the US-China trade war to a dangerous new level
(CNN Business) Resolving the trade war between the United States and China just got harder. Much harder.
Negotiations between Washington and Beijing were already on rocky ground following new rounds of tit-for-tat tariffs. Then, on Wednesday, the United States dramatically escalated its fight against Huawei, the world’s largest telecoms equipment maker and one of China’s national champions.That could scuttle an agreement entirely.

US bans Huawei from selling telecom gear and threatens its supply chain
… shortly after the order was issued, the US Commerce Department formally added Huawei to the list of companies the US government considers to be undermining American interests. By adding Huawei to the so-called Entity List, the Trump administration ensures Huawei will be covered by the new executive order.
Inclusion on the list also means companies such as Qualcomm (QCOM) may have to apply for US export licenses to continue supplying technology to Huawei.
The executive order — along with Huawei’s addition to the list — comes as Trump is seeking to apply additional pressure on China in trade talks, with stiffer tariffs affecting billions of dollars of goods.

13 May
Trade Dispute Between U.S. and China Deepens as Beijing Retaliates
(NYT) The United States and China intensified their trade dispute on Monday, as Beijing said it would increase tariffs on nearly $60 billion worth of American goods and the Trump administration detailed plans to tax nearly every sneaker, computer, dress and handbag that China exports to the United States.
The escalation thrust the world’s two largest economies back into confrontation. While President Trump said on Monday that he would meet with China’s president, Xi Jinping, next month in Japan, the stakes are only increasing as the president continues to taunt and threaten China, causing it to retaliate on American businesses.

9 May
Trump Increases China Tariffs as Trade Deal Hangs in the Balance
(NYT) President Trump escalated his trade war with China on Friday morning, raising tariffs on $200 billion worth of Chinese goods and taking steps to tax nearly all of China’s imports as punishment for what he said was Beijing’s attempt to “renegotiate” a trade deal.
Mr. Trump’s decision to proceed with the tariff increase came after a pivotal round of trade talks in Washington on Thursday night failed to produce an agreement to forestall the higher levies. The White House said talks would resume again on Friday but it remains uncertain whether the two sides can bridge the differences that have arisen over the past week.
The renewed brinkmanship has plunged the world’s two largest economies back into a trade war that had seemed on the cusp of ending. The United States and China were nearing a trade deal that would lift tariffs, open the Chinese market to American companies and strengthen China’s intellectual property protections. But discussions fell apart last weekend, when China called for substantial changes to the negotiating text that both countries had been using as a blueprint for a sweeping trade pact.

8 May
Reuters Exclusive: China backtracked on nearly all aspects of U.S. trade deal. The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world’s two largest economies, according to three U.S. government sources and three private sector sources briefed on the talks. The document was riddled with reversals by China that undermined core U.S. demands, the sources told Reuters.

5-6 May
Trump threatens seismic shift in trade war with China, suggesting new tariffs on $325 billion worth of Chinese goods
– President Donald Trump threatened to dramatically escalate the trade war with China.
– Trump said that on Friday tariffs on $200 billion worth of Chinese goods will increase from 10% to 25% and the US will slap an additional $325 billion worth of Chinese goods with a 25% tariff.
As it stands the US has placed tariffs on $250 billion worth of goods coming from China, while Beijing has responded with tariffs on $110 billion of American goods.
Economists have warned that a dramatic escalation of the trade war could cause US consumers to pay more for goods coming from the country and potentially cause serious negative consequences for the American economy.
Reuters: His shift in tone came after U.S. Trade Representative Robert Lighthizer told him that Chinese negotiators had pulled back from some prior commitments in talks last week in Beijing, people familiar with the talks said.
Specifically, the Chinese side was seeking to deal with any policy changes through administrative and regulatory actions, not through changes to Chinese law as previously agreed, one person with knowledge of the talks said. … not codifying the concessions would make it difficult to verify and enforce China’s compliance.

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