Trade talks between the U.S. and China broke up Friday with no apparent agreement, and U.S. President Donald Trump asserted that there was “no need to rush” to get a deal between the world’s two biggest economies.
Hours earlier, the Trump administration hiked tariffs on $200-billion worth of Chinese imports to 25 per cent from 10 per cent, escalating tensions between Beijing and Washington. China’s commerce ministry said it would impose “necessary countermeasures” but gave no details.
Trump tweeted Friday that the increased tariffs will bring “FAR MORE wealth” to the U.S., although a study by the Federal Reserve Bank of New York, and Columbia and Princeton universities says the burden of tariffs falls on U.S. consumers and businesses that buy imports.
Some lawmakers have recently expressed concern about the effect of the tariffs on farmers. Trump suggested on Twitter Friday that money from the additional tariffs would allow the U.S. to buy more agricultural goods from U.S. farmers and ship it to “poor & starving” countries.
The increase went ahead even after American and Chinese negotiators briefly met in Washington on Thursday and again on Friday, seeking to end the dispute that has disrupted billions of dollars in trade and shaken global financial markets. After a short session on Friday, the lead Chinese negotiator, Vice-Premier Liu He, left the Office of the U.S. Trade Representative about midday. U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin shook hands with Liu as he left.
U.S. markets slumped initially Friday but regained lost ground on optimism over future talks.
We have lost 500 Billion Dollars a year, for many years, on Crazy Trade with China. NO MORE!
China accused of reneging on commitments
The talks in Washington were thrown into disarray this week after Lighthizer and Mnuchin accused the Chinese of reneging on commitments they’d made earlier.
“China should not renegotiate deals with the U.S. at the last minute,” Trump tweeted. “There is no need to rush” through negotiations because “‘massive payments’ [from China] go directly to the Treasury of the U.S.”
In fact, the burden of tariffs falls on U.S. consumers and businesses that buy imports. By the end of last year, those consumers and companies were paying $3 billion a month in higher taxes and absorbing $1.4 billion a month in lost efficiency, according to a study by the Federal Reserve Bank of New York, and Columbia and Princeton universities.
Money is indeed going into the federal treasury, but it’s mostly, if not entirely, coming from the tariffs on U.S. businesses and consumers, not China, and it’s not a driver of economic growth, but rather a risk to it.
Your all time favorite President got tired of waiting for China to help out and start buying from our FARMERS, the greatest anywhere in the World!
U.S. business groups appealed for a settlement that will resolve chronic complaints about Chinese market barriers, subsidies to state companies and a regulatory system they say is rigged against foreign companies.
The latest increase extends 25 per cent duties to a total of $250 billion of Chinese imports, including $50 billion worth that were already taxed at 25 per cent before the new hike. Trump said Sunday he might expand penalties to all Chinese goods shipped to the United States.
Beijing retaliated for previous tariff hikes by raising duties on $110 billion of American imports. But regulators are running out of U.S. goods for penalties due to the lopsided trade balance.
‘We should not hurt innocent people’
Chinese officials have targeted operations of American companies in China by slowing customs clearance for their goods and stepping up regulatory scrutiny that can hamper operations.
The higher U.S. import taxes don’t apply to Chinese goods shipped before Friday. By sea, shipments across the Pacific take about three weeks, which gives negotiators a few more days to reach a settlement before importers may have to pay the increased charges.
Liu, speaking to Chinese state TV on his arrival in Washington, said he “came with sincerity.” He appealed to Washington to avoid more tariff hikes, saying they are “not a solution” and would harm the world.
“We should not hurt innocent people,” Liu told CCTV.
A sticking point is U.S. insistence on an enforcement mechanism with penalties to ensure Beijing lives up to its commitments. American officials say China has repeatedly broken past promises.
China wants tariffs lifted as soon as an agreement is reached, while U.S. officials want to keep them as leverage to ensure compliance.
Prime Minister Justin Trudeau urged Trump in a phone call to press China to release two Canadians who have been held for five months.
The men were detained in apparent retaliation after Canada arrested an executive of Chinese tech giant Huawei on U.S. charges of bank fraud.
This story originally appeared on CBC