First day of U.S.-China trade talks end; Trump's tariff hike set to take effect

[webfact]

First day of U.S.-China trade talks end; Trump's tariff hike set to take effect

By Jeff Mason and David Lawder

 

Chinese Vice Premier Liu He shakes hands with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer outside the office of the U.S. Trade Representative in Washington, U.S., May 9, 2019. REUTERS/James Lawler Duggan

 

WASHINGTON (Reuters) - Top U.S. and Chinese trade negotiators concluded the first of two days of talks on Thursday to rescue a trade deal that is close to collapsing as Washington prepares to go ahead with plans to hike tariffs on hundreds of billions of dollars of goods imported from China.

 

Tension between Washington and Beijing has risen after a major setback in negotiations last week when China revised a draft deal and weakened commitments to meet U.S. demands for trade reform.

 

President Donald Trump responded by ordering a tariff hike, and China has said it would retaliate. The 10-month-old trade war has already cost companies in both countries billions of dollars.

 

Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday and were expected to resume talks on Friday. Officials did not speak to reporters as they left the talks.

 

In comments to Chinese state media upon arriving in Washington, Liu said that hiking tariffs "is very disadvantageous to both parties".

 

"We come here this time, under pressure, which shows China's greatest sincerity, and want to sincerely, confidently, and rationally resolve certain disagreements or differences facing China and the United States. I think there is hope," he said.

 

Before they get back around the table on Friday, the United States will have increased duties on $200 billion of Chinese goods, to 25 percent from 10 percent. The duties apply to cargoes leaving China after 12:01 a.m. EDT (0401 GMT) Friday.

 

Consumer products, including cell phones, computers, clothing and toys, are to be especially hard hit.

 

Lighthizer and Mnuchin have agreed with Liu to continue trade talks on Friday morning, a White House spokesman said on Thursday. Trump met with Lighthizer and Mnuchin earlier to discuss the talks.

 

Trump on Thursday took aim at the $325 billion in Chinese goods that are so far untouched by the trade war, saying he was "starting ... paperwork today" to tax those with a punitive tariff of 25 percent.

 

Trump, who has adopted protectionist policies as part of his "America First" agenda aimed at rebalancing global trade and boosting U.S. manufacturing, accused Beijing of reneging on commitments made during months of negotiations.

 

"We were getting very close to a deal, then they started to renegotiate the deal. We can't have that. We can't have that," Trump said at an event at the White House.

 

Trump said if the two sides cannot make a deal, the United States would go back to manufacturing products that China now makes. "It'll be the old-fashioned way, the way we used to do it: We made our own product."

 

U.S. stock indexes closed lower on Thursday ahead of the trade talks, though they pared losses after Trump said he had received a "beautiful" letter from Chinese President Xi Jinping. U.S. oil prices slid and U.S. Treasury yields fell as investors sought safe-haven assets.

 

Data released Thursday showed the U.S. goods trade deficit with China shrank to its smallest level in five years in March, which could further embolden Trump as he escalates the trade war with Beijing.

 

Plans by Washington to hike tariffs could cut China's growth by 0.3 percentage points but the strengthening economy has become more resilient to external shocks, a Chinese central bank adviser said on Friday.

 

TENSE TALKS

China appealed to the United States to help salvage the deal earlier on Thursday. Commerce Ministry spokesman Gao Feng said the decision to send Liu to Washington despite the tariff hike threat demonstrated China's "utmost sincerity."

 

"The U.S. side has given many labels recently, 'backtracking,' 'betraying,' etc. ... China sets great store on trustworthiness and keeps its promises, and this has never changed," he told a news briefing in Beijing.

 

A source familiar with the talks said China's changes to the language of the draft trade deal were so extensive it could take a month to fix them, assuming the United States rejects them.

 

The talks could still go several ways, a person close to the discussions said.

 

China could make some concessions to prolong talks even after tariffs and retaliation. The two sides could end negotiations, given they are so far apart.

 

Or China could reverse the changes to the text and return the negotiations to where they were a week ago and work towards a deal to be signed at the G20 summit in Japan in June, the source said.

 

WIDE RIFT

Reuters on Wednesday revealed the extent of the rift that has opened between the two countries, reporting that a draft trade agreement text sent by Beijing on Friday night was riddled with changes that marked reversals in Chinese commitments that undermined core U.S. demands.

 

In seven chapters of the draft, China deleted commitments to change laws to resolve complaints that caused the United States to launch a trade war: theft of U.S. intellectual property and trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation, sources told Reuters.

 

The stripping of binding legal language from the draft struck directly at Lighthizer's highest priority. The U.S. trade representative views changes to China's laws as essential to verifying compliance after years of what U.S. officials have called empty reform promises.

 

Trump told supporters at a rally in Florida on Wednesday that China "broke the deal," and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing "stops cheating our workers."

 

(Additional reporting by David Lawder, Doina Chiacu, Humeyra Pamuk and Alex Alper in Washington, Ben Blanchard and Se Young in Beijing; Writing by David Lawder; Editing by Simon Webb and Leslie Adler & Simon Cameron-Moore)

 

-- © Copyright Reuters 2019-05-10

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[Kasane]

Hopefully, China will not buckle to US bullying.

[zydeco]

Turns out that this was another phony Trump deadline. Just like the Wall, just like the budget ultimatums, just like DACA, just like health care. Just like EVERYTHING. 

Quote

According to the filing Wednesday in the Federal Register, the tariff hike won’t hit goods that have already left Chinese ports before Friday’s deadline.

So the tariffs won’t start taking affect until those shipments complete the three- to four-week voyage across the Pacific Ocean.

 https://www.marketwatch.com/story/us-tariff-deadline-looms-for-chinese-goods-but-hike-wont-take-effect-for-weeks-2019-05-09?mod=mw_latestnews

[thaibeachlovers]

Good news. China has been stealing the west's technology and jobs for years. It's payback time.

[TallGuyJohninBKK]

21 minutes ago, zydeco said:

Turns out that this was another phony Trump deadline. Just like the Wall, just like the budget ultimatums, just like DACA, just like health care. Just like EVERYTHING. 

 https://www.marketwatch.com/story/us-tariff-deadline-looms-for-chinese-goods-but-hike-wont-take-effect-for-weeks-2019-05-09?mod=mw_latestnews

 

I think the Reuters report is saying it differently:

 

Quote

 The duties apply to cargoes leaving China after 12:01 a.m. EDT (0401 GMT) Friday.

 

So in their version, any higher tariffs would be applied based on when the products leave China...not based on when they arrive the U.S.

 

I have no idea if that's correct or not... but that's what Reuters is saying.

 

[TallGuyJohninBKK]

5 minutes ago, thaibeachlovers said:

Good news. China has been stealing the west's technology and jobs for years. It's payback time.

 

In that part, I think we find ourselves in rare agreement, at least as to the history of Chinese conduct.

 

But whether Trump's approach to dealing with the Chinese, and trying to actually solve the problem, has been a good one is a whole different issue...

 

 

[zydeco]

8 minutes ago, TallGuyJohninBKK said:

 

I think the Reuters report is saying it differently:

 

 

So in their version, any higher tariffs would be applied based on when the products leave China...not based on when they arrive the U.S.

 

I have no idea if that's correct or not... but that's what Reuters is saying.

 

That still leaves 3 to 4 weeks for "negotiations." And for Trump to talk, talk, talk. We will get the same old daily "trade talks hopes rise" and "progress being made" and "getting close to a deal" that we've already heard for months and months. The last time Trump had a tariff deadline, the tariffs started for products coming in that very day. So if the boat had just docked in LA one minute after the tariff deadline, tariffs were due. Not like this month long delay we're getting now. This is all Trump does: talk tough, brag, preen, threaten, and then cave.

[pegman]

This guy lost $1.1b in the 1980's. What could go wrong? Looks like another farm bailout on the way.

[thaibeachlovers]

19 minutes ago, TallGuyJohninBKK said:

 

In that part, I think we find ourselves in rare agreement, at least as to the history of Chinese conduct.

 

But whether Trump's approach to dealing with the Chinese, and trying to actually solve the problem, has been a good one is a whole different issue...

 

 

I'm agog to hear the opposition's "better" approach. Short of banning all Chinese imports I doubt there is much he can do differently.

I'm laughing when China threatens to impose higher tariffs on US goods given they don't buy that much US stuff.

As I see it, Trump is forcing US manufacturers to start at least considering re locating to the US, which would be a win for him.

[Longcut]

3 hours ago, Kasane said:

Hopefully, China will not buckle to US bullying.

I hope they don't either. I would like to see America kick China to the curb and start manufacturing again. That will also help solve the migrant problem. They will all need jobs.

Edited May 10, 2019 by Longcut

[Kasane]

15 minutes ago, Longcut said:

I hope they don't either. I would like to see America kick China to the curb and start manufacturing again. That will also help solve the migrant problem. They will all need jobs.

I would like to see China make all of America, a rouge nation on the planet, trailer trash.

[Berkshire]

3 hours ago, thaibeachlovers said:

I'm agog to hear the opposition's "better" approach. Short of banning all Chinese imports I doubt there is much he can do differently.

I'm laughing when China threatens to impose higher tariffs on US goods given they don't buy that much US stuff.

As I see it, Trump is forcing US manufacturers to start at least considering re locating to the US, which would be a win for him.

Trump and many of his supporters don't really understand how the global supply chain works and America's role in it.  If I was a CEO, I'd simply plan for Trump's imminent departure, knowing that the new President will be more reasonable.  So no, US manufacturers won't consider returning to the US solely because of Trump's tariffs.  As for impact to the US economy and consumers, there will be some costs for sure...as well as collateral damage.  But for starters...

 

[President Donald Trump’s higher tariffs on Chinese imports will have “dire consequences” for U.S. equipment manufacturers and worsen prospects for American farmers and others already reeling from lower commodity prices, an industry trade group warned on Friday.]

 

https://www.bloomberg.com/news/articles/2019-05-10/u-s-equipment-makers-see-trump-tariff-hike-costing-400-000-jobs

 

[Pedrogaz]

5 hours ago, thaibeachlovers said:

Good news. China has been stealing the west's technology and jobs for years. It's payback time.

Silly, US and EU corporations flocked to China when it opened up for cheap land to build factories and cheap labour....to increase their profits. And US tax law encourages them to do it. There is no job stealing and no technology stealing as they would be way ahead of the US right now in chip technology and they are years behind.

[spidermike007]

After bankrupting five companies, and losing an average of $100,000,000 a year for ten years running, the GOP comes up with the brilliant idea of letting this man participate in the negotiations with China. Any person on the Chinese negotiating team would beat Trump in a game of chess in three minutes, five in a row. Any of them would blow Trump away in terms of intelligence, preparation, and negotiating skills. It does not take much to beat Trump. He is a house of cards.

 

 

[Traubert]

5 hours ago, thaibeachlovers said:

I'm laughing when China threatens to impose higher tariffs on US goods given they don't buy that much US stuff.

 

Physically they dont import that much US stuff, no, as in arriving at the docks/airports.

 

But.

 

Every American, indeed foreign, product manufactured in China counts as an import, even though it hasn't left the country. Double the import tax and that will start to hurt badly. China is the single largest market on the planet.

 

Don't think China will roll over on this one.

[Srikcir]

5 hours ago, thaibeachlovers said:

Trump is forcing US manufacturers to start at least considering re locating to the US

Trump's trade war won't bring US manufactures back and maybe just the reverse.

• more than 800 companies in a survey said:
• more than 4 in 10 companies surveyed plan to raise prices to offset the higher cost of production.
• 1 in 10 said they plan to reduce the share of total output produced outside the U.S.
• Roughly the same number said the tariffs would encourage them to move more jobs offshore.

https://www.cnbc.com/2018/11/28/manufacturers-say-trump-tariffs-to-bring-higher-prices-not-jobs-survey.html

Two other points:

• Relocating back to the US requires a significant capital investment and time. It might be more profitable to simply lose market by downsizing if they must relocate. Relocation may also require significant tax benefits from states paid by taxpayers to attract the relocating businesses.
• Automation may be used to compensate for lost cheap foreign labor being replaced with more expensive US labor.

Adidas as an example is opening a new factory in Georgia that will be highly robotized with only about 160 human workers. So while those jobs are staying in the U.S., the plants aren’t employing nearly as many human workers as they would have in the past. https://www.vox.com/2017/5/26/15656120/manufacturing-jobs-automation-ai-us-increase-robot-sales-reshoring-offshoring

 

 

[Tug]

Get ready to pay much much more for everything it really is unbelievable that the biggest business man failure is negotiating any kind of trade deal what a world we live in

[IAMHERE]

The trade negotiators that Trump has advising him are a lot smarter and more knowledgeable than I am. Hope the USA reduces their trade deficits. 

[candide]

1 hour ago, Srikcir said:

Trump's trade war won't bring US manufactures back and maybe just the reverse.

• more than 800 companies in a survey said:
• more than 4 in 10 companies surveyed plan to raise prices to offset the higher cost of production.
• 1 in 10 said they plan to reduce the share of total output produced outside the U.S.
• Roughly the same number said the tariffs would encourage them to move more jobs offshore.

https://www.cnbc.com/2018/11/28/manufacturers-say-trump-tariffs-to-bring-higher-prices-not-jobs-survey.html

Two other points:

• Relocating back to the US requires a significant capital investment and time. It might be more profitable to simply lose market by downsizing if they must relocate. Relocation may also require significant tax benefits from states paid by taxpayers to attract the relocating businesses.
• Automation may be used to compensate for lost cheap foreign labor being replaced with more expensive US labor.

Adidas as an example is opening a new factory in Georgia that will be highly robotized with only about 160 human workers. So while those jobs are staying in the U.S., the plants aren’t employing nearly as many human workers as they would have in the past. https://www.vox.com/2017/5/26/15656120/manufacturing-jobs-automation-ai-us-increase-robot-sales-reshoring-offshoring

 

 

Good points.

Companies are likely to relocate (from both USA and China) in 'neutral' countries where they can go on with integrating global value chains, without being subject to tariffs from USA or China. It may be good for ASEAN countries.

 

Companies relocating in the USA are likely to use robots rather than expensive manpower, as you also outline. It is also likely to contribute to speed up the rate of adoption of robotisation by other companies. 

[attrayant]

8 hours ago, thaibeachlovers said:

As I see it, Trump is forcing US manufacturers to start at least considering re locating to the US, which would be a win for him.

 

 

Why do you think the only option is to relocate back to the US?

 

Apple Supplier GoerTech Moving AirPod Plant to Vietnam to avoid Possible Escalation of China-USA Trade War

 

"China's GoerTek has become the first of Apple's leading equipment suppliers to confirm plans to shift production out of the country to avoid being caught up in the escalating trade war between Washington and Beijing.

 

At the same time, two other smartphone suppliers -- Taiwan's Pegatron and Cheng Uei Precision Industry -- are looking at expanding capacity outside China for similar reasons, although this may not include Apple equipment."

 

 

 

 

[hugocnx]

I'd like Trump to check out the Thai tariffs. 

[jm91]

8 hours ago, thaibeachlovers said:

As I see it, Trump is forcing US manufacturers to start at least considering re locating to the US, which would be a win for him.

A "win for HIM" ???? You sound like a true cult member. It is all about the winning and losing of the dear cult leader. The issue is what is BEST for the United States. I could be wrong but the members of the cult orange trump cult do not care or think about the USA. They only care about their dear leader. 

[Youlike]

9 hours ago, thaibeachlovers said:

Good news. China has been stealing the west's technology and jobs for years. It's payback time.

The West placed the factories there, trained the staff and taught them how to produce.

 

That's not stealing.....

 

Apple should produce their own phones in the US...

[jvs]

8 hours ago, thaibeachlovers said:

As I see it, Trump is forcing US manufacturers to start at least considering re locating to the US, which would be a win for him.

How much more expensive would a product be when made in the US?Going back in time will not be easy.

 

[Tug]

2 hours ago, IAMHERE said:

The trade negotiators that Trump has advising him are a lot smarter and more knowledgeable than I am. Hope the USA reduces their trade deficits. 

Donald doesent use advisers he just reacts then expects everyone to praise him 

[Traubert]

54 minutes ago, attrayant said:

 

Why do you think the only option is to relocate back to the US?

 

Apple Supplier GoerTech Moving AirPod Plant to Vietnam to avoid Possible Escalation of China-USA Trade War

 

"China's GoerTek has become the first of Apple's leading equipment suppliers to confirm plans to shift production out of the country to avoid being caught up in the escalating trade war between Washington and Beijing.

 

At the same time, two other smartphone suppliers -- Taiwan's Pegatron and Cheng Uei Precision Industry -- are looking at expanding capacity outside China for similar reasons, although this may not include Apple equipment."

 

 

 

 

China withdrew the subsidies for microchip manufacturers from Taiwan once the mainland companies became self sufficient in production. This was around two years ago. It's obviously starting to hurt.

[Cryingdick]

19 hours ago, zydeco said:

That still leaves 3 to 4 weeks for "negotiations." And for Trump to talk, talk, talk. We will get the same old daily "trade talks hopes rise" and "progress being made" and "getting close to a deal" that we've already heard for months and months. The last time Trump had a tariff deadline, the tariffs started for products coming in that very day. So if the boat had just docked in LA one minute after the tariff deadline, tariffs were due. Not like this month long delay we're getting now. This is all Trump does: talk tough, brag, preen, threaten, and then cave.

We buy 500 billion from China, they buy 100 billion from us that they have already put tariffs on. They can sell off debt or try to manipulate their currency. The response to the currency thing would be to raise tariffs higher which Trump can do without a bunch of dems agreeing.

 

This week was a little rough on the markets but the retrace that happened today as the Chinese boarded there bus to the airport was a big middle finger to China.

 

I would like to see a boycott Walmart movement start. In the mean time companies like Apple are moving out of China and when they do it is forever. America has the upper hand. Even Pelosi and Schumer have praised Trump on the matter.

 

American investors are buying every dip and the recovery in the market is almost instantaneous. There is a lot of money on the side right now. The Chinese trade negotiators had to go home and ask papa Xi what to do as they ran out of the length of the leash they were put on. 

 

The American investors gave a nice middle finger to the Chinese while they go lick their wounds. Anybody that sold off this week simply transferred their money to brighter, stronger investors.

 

China is in a spot now.

Edited May 11, 2019 by Cryingdick

[Tug]

8 minutes ago, Cryingdick said:

We buy 500 billion from China, they buy 100 billion from us that they have already put tariffs on. They can sell off debt or try to manipulate their currency. The response to the currency thing would be to raise tariffs higher which Trump can do without a bunch of dems agreeing.

 

This week was a little rough on the markets but the retrace that happened today as the Chinese boarder there bus to the airport was a big middle finger to China.

 

I would like to see a boycott Walmart movement start. In the mean time companies like Apple are moving out of China and when they do it is forever. America has the upper hand. Even Pelosi and Schumer have praised Trump on the matter.

 

American investors are buying every dip and the recovery in the market is almost instantaneous. There is a lot of money on the side right now. The Chinese trade negotiators had to go home and ask papa Xi what to do as they ran out of the length of the leash they were put on. 

 

The American investors gave a nice middle finger to the Chinese while they go lick their wounds. Anybody that sold off this week simply transferred their money to brighter, stronger investors.

 

China is in a spot now.

I sincerely hope you are right but with Donald’s track record I have my doubts meanwhile let’s all pay more for everything!

[Cryingdick]

6 minutes ago, Tug said:

I sincerely hope you are right but with Donald’s track record I have my doubts meanwhile let’s all pay more for everything!

Well if things go up at Walmart maybe look for American products. I for example buy my free range eggs from a local farmer. I also know they are what the farmer says the are. The eggs are twice the cost of Walmart but they are huge and have deep orange yolks as opposed to the thin yellow yolks of the typical grocery store eggs.

 

China's main trouble might be that it could take China to unite an otherwise divisive cultural landscape in the USA. The USA always functions the best with a clearly defined enemy. Most consumer electronics and such can be purchases from South Korea, Taiwan, and other places.

 

For now the tariffs won't come into play until June which means any boat leaving China now will be exempted but they better hurry. One bad day at sea and BOOM you pay. This is hardball at its best.

Edited May 11, 2019 by Cryingdick

[bristolboy]

5 minutes ago, Cryingdick said:

Well if things go up at Walmart maybe look for American products. I for example buy my free range eggs from a local farmer. I also know they are what the farmer says the are. The eggs are twice the cost of Walmart but they are huge and have deep orange yolks as opposed to the thin yellow yolks of the typical grocery store eggs.

 

China's main trouble might be that it could take China to unite an otherwise divisive cultural landscape in the USA. The USA always functions the best with a clearly defined enemy. Most consumer electronics and such can be purchases from South Korea, Taiwan, and other places.

 

For now the tariffs won't come into play until June which means any boat leaving China now will be exempted but they better hurry. One bad day at sea and BOOM you pay. This is hardball at its best.

As virtually any economist will tell you, one of the chief effects of a country raising tariffs is to raise the value of that country's currency. So Trump's tariffs will also hurt US exports.

Also, those import figures are greatly inflated. Since that Samsung phone gets assembled shipped from China, statistically it gets counted as a Chinese export even though very little value is added in China. 

And your egg example is completely irrelevant since the US is not exactly dependent on Chinese eggs. Agriculture is one area where historically the US has a surplus with China. Maybe Americans should up their consumption of bacon to make up for the lost trade with China? On the other hand consumer electonics...