Trade talks with China appear on despite Trump push on tariffs

BEIJING — Chinese envoys are preparing to travel to the United States for trade talks, a government spokesman said Monday, suggesting talks on ending a bruising tariff war will go ahead despite President Donald Trump’s surprise threat to raise import taxes.

Beijing is “trying to get more information” following Trump’s announcement he might impose 25 percent tariffs on more Chinese imports, said the foreign ministry spokesman, Geng Shuang.

Trump’s announcement Sunday on Twitter caused financial markets to plunge. It prompted suggestions Beijing might pull out of talks planned for this week to avoid looking weak in the face of American pressure.

The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!

— Donald J. Trump (@realDonaldTrump) May 6, 2019

Asked whether the top Chinese envoy, Vice Premier Liu He, would visit Washington as planned, Geng said, “a Chinese team is preparing to travel to the United States for trade talks.”

Geng declined to give further details when asked who might go or whether the talks would start Wednesday as scheduled. He referred other questions to the Commerce Ministry, which did not respond to requests for comment.

The lack of details suggested Beijing is wrestling with the conflict between wanting to end a fight that has battered Chinese exporters and its reluctance to appear to be giving in to Washington.

“We hope the United States will join efforts with China and we can meet each other halfway so we make a mutually beneficial agreement on the basis of win-win and mutual respect,” Geng said.

The two governments have raised tariffs on tens of billions of dollars of each other’s goods in their dispute over U.S. complaints about Chinese technology ambitions.

That has disrupted trade in goods from soybeans to medical equipment.

Trump turned up the heat Sunday by saying he would raise import taxes on $200 billion in Chinese products to 25% from 10% as of Friday. Washington already is charging 25% duty on another $50 billion of Chinese imports, while Beijing has imposed penalties on $110 billion of American goods.

U.S. markets tumble

U.S. companies with heavy business interests in China were getting hit the hardest, particularly technology and industrial companies. Banks also fell sharply. The market’s slide followed a sell-off in Europe and Asia.

The Dow Jones Industrial Average fell 159 points, or 0.6%, to 26,345 as of 11:20 a.m. PDT. It was down as much as 471 in the first few minutes of trading.

The S&P 500 index dropped 0.7% and the Nasdaq slid 0.9%.

Stocks plunge worldwide

Stock markets around the world, particularly in Asia, fell sharply Monday after U.S. President Donald Trump threatened to increase tariffs on imports from China at a time when many investors were banking on an easing in trade tensions between the two countries.

Investors started the new week on a downbeat tone after Trump said via Twitter that he planned to raise tariffs on imports from China to 25% from 10% as of Friday. Complaining that trade talks with China were moving too slowly, he also said he would impose tariffs on $325 billion worth of products from China, accounting for all of its exports.

He said: “The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”

That knocked sentiment immediately in Asia, where the Shanghai Composite index closed 5.6% lower at 2,906.46 after plunging more than 6% earlier in the session. Hong Kong’s Hang Seng index sank 2.9% to 29,209.82.

That selling carried through into the European session and is expected to weigh on U.S. stocks at the bell.

In Europe, the CAC 40 in France was down 2% at 5,441 while Germany’s DAX skidded 1.8% to 12,187. London’s markets were closed for a bank holiday.

Deadline delayed earlier

Trump pushed back deadlines in January and March to raise tariffs in a bid to buy more time for negotiations. But on Sunday, Trump said on Twitter a deal with Beijing was coming “too slowly, as they attempt to renegotiate. No!”

Trump also threatened to slap tariffs on another $325 billion in imports from China, covering everything it ships annually to the United States.

Trump hiked tariffs on Chinese imports on July 6 in response to complaints Beijing steals or pressures foreign companies to hand technology.

Washington and other trading partners also want Beijing to scale back plans for government-led creation of Chinese global competitors in robotics and other technology. They say those violate the communist government’s market-opening commitments.

Making progress, no details

Both sides say they are making progress but no details have been released.

Beijing’s negotiators have agreed to narrow the politically sensitive Chinese trade surplus with the United States by purchasing more soybeans, natural gas and other goods.

They have offered to change industrial strategies but have ruled out discarding them outright.

Another sticking point is U.S. insistence on an enforcement mechanism with penalties in the event Beijing fails to stick to any commitments it makes.

Economists suggested Trump may want to step up pressure because China’s economy is improving, reducing the urgency for Beijing to strike a deal.

The latest quarter’s growth held steady despite a slump in exports to the United States. That suggested official efforts to reverse a downturn were gaining traction.

“China may have appeared less willing to offer additional concessions,” said Citigroup economists in a report.

Trump’s threat makes going ahead with talks “very difficult politically” for President Xi Jinping’s government, said Jake Parker, vice president of the U.S.-China Business Council. He said the Chinese public might “view this as a capitulation” if Beijing reached an agreement before Trump’s Friday deadline.

If Trump carries out his threat, American companies in China “would be very concerned” about official retaliation, said Parker.

A Chinese decision to pull out of talks could have global repercussions, causing turmoil in financial markets and dragging on economic growth, economists said.

“The risk of an all-out U.S.-China trade war has increased significantly,” Tao Wang and Ning Zhang of UBS said in a report.