China Trade Tensions Are Getting Even More Confusing

Gerardo Harmon
May 25, 2018

Trump's statement comes amid the negotiations between the world's two largest economies after potential tariffs on both sides raised fears of a trade war, even as some tensions have eased over signs of some possible progress.

"Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion", he tweeted early on Wednesday.

Even before an American delegation departs for Beijing to flesh out the details, this week's agreement between the USA and China on trade, which led to the suspension of tariffs on up to $150 billion worth of Chinese goods, appears to be coming apart.

Commerce Secretary Wilbur Ross announced he initiated a so-called Section 232 investigation on auto trade - which would provide the legal basis to impose tariffs, if his department finds imports threaten United States national security - after speaking with Donald Trump on the matter.

After high-level talks last week in Washington, Beijing agreed in a joint statement with the U.S.to "substantially reduce" America's trade deficit with China.

Critics of the deal have also complained that it is silent on broader economic issues important to the U.S., including Chinese acquisition of American technology; the country's plans to subsidise growth of advanced domestic industries such as artificial intelligence and clean energy; and USA companies' access to China's markets.

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To be fair, the USA has set a $200 billion deficit reduction as its target, but even that is going to be extremely challenging. But after Mr. Kim made not one, but two surprise visits to China in a short span of 40 days, his attitude hardened.

"China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems and disrupt normal global trade order", Gao Feng, spokesman at the Ministry of Commerce, said at a regular news briefing on Thursday which focused largely on whether Beijing and Washington are making any progress in their growing trade dispute.

"And therefore, I don't think we're saying tariffs are over". In auto parts exports to the U.S., China was ranked second a year ago.

"Core industries such as automobiles and automotive parts are critical to our strength as a nation", Trump's statement said.

Last week Japan went to the World Trade Organization to warn of possible retaliation for tariffs on steel and aluminum, which Trump imposed in March.

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Critics say it doesn't make sense to have the Treasury Secretary, Steven Mnuchin, negotiating trade policy. Soybeans account for $14 billion of USA exports to China. "We're looking at the possibility of things turning around here". "On China, Barriers and Tariffs to come down for first time".

"The U.S. auto industry is thriving and growing".

Eric Schweitzer said in a statement Thursday: "We should nearly regard this as a provocation". Europe is also a big exporter to the U.S.

More recently, Trump moved the USA embassy in Israel from Tel Aviv to Jerusalem, despite a broad worldwide consensus to determine the contested city's status within the context of broader negotiations on a settlement of the Israeli-Palestinian conflict. He added that China has already essentially contracted out around two or three months' worth of buying, primarily from South America.

Jia Xinguang, executive director of China Automobile Dealers Association, said the tariff cuts will not influence China's mainstream market, as most imported vehicles are high-end models.

Trump has frequently lambasted China's high import duties on foreign cars. Brussels has also ruled out voluntary export restraints where European steel makers would limit exports to America but receive higher prices in exchange for the U.S. removing its tariff threats.

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