U.S., China to Resume Trade Talks as Tariffs Bite


The U.S. and China reached a modest breakthrough in their trade dispute, saying they would hold lower-level talks later this month on the spiraling dispute.

Officials from both countries said on Thursday that a Chinese vice minister would travel to the U.S. at the invitation of the Treasury Department to discuss trade issues on Aug. 22 and 23.

“We are open to discussions on structural issues,” said a White House spokeswoman. “We are looking to China to address these concerns” and to bring “concrete proposals.”

The talks would be the first in more than two months. During that time, the


administration imposed tariffs on tens of billions of dollars of Chinese goods and Beijing responded with levies of its own. Officials on both sides have said that their counterparts seemed uninterested in concessions. The dispute has hit China’s stock markets and currency while largely sparing U.S. markets.

Now, trade analysts said, U.S. plans to move ahead in coming weeks with penalties on $200 billion more in Chinese goods is raising the stakes.

“The talks are necessary to avoid a complete rupture of China-U.S. relations, although the chance of coming to an agreement is low,” said Mei Xinyu, an analyst at a think tank under China’s Commerce Ministry and a frequent critic of U.S. trade policy.

The August discussions will be held at a lower level than previous efforts, which were helmed by Treasury Secretary

Steven Mnuchin

and Chinese Vice Premier Liu He. The talks—to be led by Treasury Undersecretary

David Malpass

and Vice Commerce Minister

Wang Shouwen

—are meant to be exploratory, providing a way for both sides to save face should progress prove elusive, said people briefed on the discussions.

The Chinese side will also be represented by Finance Vice Minister Liao Min, who is a top aide to Vice Premier Liu He, and Chinese Commerce Ministry Deputy Director Zhao Na.

The U.S. Treasury has been refining its demands for Beijing, those people said, including lowering tariffs, ending policies that press U.S. firms to transfer technology to Chinese partners and improving market access for foreign companies to reduce what the U.S. calculates is a $375 billion trade imbalance in China’s favor last year.

Another item on the U.S. agenda, the people say, is persuading Beijing to raise the value of its currency to its pre-dispute level. The U.S. has complained for years that Beijing manipulates the yuan’s value to help boost its exports. The currency has fallen nearly 10% against the greenback since April, though it briefly rose nearly 0.5% Thursday after the news of the coming talks. China’s central bank has attributed the yuan’s weakness to market reaction to a strengthening U.S. dollar.

Largely as a result of the falling yuan, Mr. Trump ordered that the prospective tariffs on $200 billion in Chinese goods be raised to as high as 25% from 10% so Beijing can’t use devaluation to limit the tariff’s sting.

U.S. officials have said that in previous talks their Chinese counterparts showed little imagination in addressing American complaints about unfair trade practices.

Chinese officials, meanwhile, have privately said the U.S. demands are too wide-ranging and are ultimately aimed at getting Beijing to dismantle its government-supported economic system.

Divisions within the U.S. government are likely to loom over the coming talks.

Some analysts add that the Chinese side is likely to be wary of promises made by U.S. officials that aren’t directly endorsed by Mr. Trump. Messrs. Mnuchin and Liu declared a truce in the trade fight in late May only to have Mr. Trump announce shortly afterward a decision to go ahead with tariffs.

As the Treasury works to restart negotiations with Beijing, the U.S. Trade Representative is scheduled to hold public hearings starting Monday on the $200 billion in tariffs. The Trump administration’s more hawkish trade advisers argue that Beijing will become more willing to make concessions as the additional tariffs hit. China has said it would respond with additional tariffs.

These U.S. trade advisers believe China’s economy is weaker than commonly believed and that America’s strengthening economy gives them room to maneuver politically, even if some U.S. industries feel pain from the tariff fight. The Trump administration is also putting the finishing touches on a plan to compensate farmers for falling prices caused by the trade battle.

Some analysts and lobbyists said differing agendas within the U.S. government and between Washington and Beijing would likely confound progress in the talks.

“This is a waste of time for the two governments, especially China’s. If there isn’t a conversation centered around seriously limiting Chinese industrial policy and USTR isn’t representing the U.S., it’s a meaningless discussion,” said

Scott Kennedy

of the Center for Strategic and International Studies in Washington, using an abbreviation for the trade representative.

David French,

a trade lobbyist at the National Retail Federation, a U.S. trade association, said: “I’m not sure the U.S. administration position is clear. It could be difficult for the Chinese to understand what our direction is or what our purpose is with tariffs.”

In its brief statement announcing the talks, China’s Commerce Ministry said Beijing “won’t accept any unilateral trade restrictions.”

If Beijing wants to head off the planned tariffs on $200 billion in goods, some analysts said, it could try promising to buy a large amount of U.S. products. Chinese officials offered in June to buy nearly $70 billion in U.S. agriculture and energy goods, falling short of the $200 billion Mr. Trump wanted to reduce the U.S. deficit by. Senior U.S. officials dismissed that offer as hype, arguing that the amount offered was far less than $70 billion.

“It would be critically important for China to bring measurable deliverables,” said Jacob Parker, vice president of the U.S.-China Business Council.

Write to Chao Deng at [email protected] and Bob Davis at [email protected]



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