U.S. and China at impasse over trade, Kudlow says new tariffs will remain

U.S. and China at impasse over trade, Kudlow says new tariffs will remain

WASHINGTON/BEIJING (Reuters) – The United States and China appeared at a deadlock over trade negotiations on Sunday as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.

U.S. President Donald Trump, U.S. Secretary of State Mike Pompeo, U.S. President Donald Trump’s national security adviser John Bolton and Chinese President Xi Jinping attend a working dinner after the G20 leaders summit in Buenos Aires, Argentina December 1, 2018. REUTERS/Kevin Lamarque

The trade war between the world’s top two economies escalated on Friday, with the United States hiking tariffs on $200 billion worth of Chinese goods after President Donald Trump said Beijing ‘broke the deal’ by reneging on earlier commitments made during months of negotiations.

White House economic adviser Larry Kudlow told Fox News on Sunday that the United States needs to see China agree to “very strong” enforcement provisions for an eventual deal and said the sticking point was Beijing’s reluctance to put agreed changes into law.

He vowed the tariffs would remain in place while negotiations continue.

Beijing remained defiant, however. “At no time will China forfeit the country’s respect, and no one should expect China to swallow bitter fruit that harms its core interests,” said a commentary, due for Monday publication, in the ruling Communist Party’s People’s Daily.

It said Beijing’s doors were open to talks but it would not yield on important issues of principle.

Kudlow said there was a “strong possibility” that Trump will meet with Chinese President Xi Jinping at a G20 summit in Japan in late June. Until last week, there were expectations Trump and Xi would sign a trade deal at the summit.

However, the trade talks suffered a major setback last week when China proposed extensive revisions to a draft agreement. It wanted to delete prior commitments that Chinese laws would be changed to enact new policies on issues from intellectual property protection to forced technology transfers.

‘SOMETHING MUCH CLEARER’

Vice Premier Liu He, China’s top economic adviser, sought to defend the changes in talks with senior U.S. officials in Washington on Thursday and Friday, arguing that China could accomplish the policy changes through decrees issued by its State Council, or cabinet, sources familiar with the talks said.

But U.S. Trade Representative Robert Lighthizer rejected that, telling Liu that the United States was insisting on restoration of the previous text.

“We would like to see these corrections in an agreement which is codified by law in China, not just a State Council announcement. We need to see something much clearer. And until we do we have to keep our tariffs on,” Kudlow said.

China strongly opposes the latest U.S. tariff hike, and has to respond to that, Liu told reporters on Saturday.

Kudlow said on Sunday he expected retaliatory tariffs to kick in but that it had not happened yet.

Trump has ordered Lighthizer to begin the process of imposing tariffs on all remaining imports from China, a move that would affect about an additional $300 billion worth of goods.

Lighthizer said a final decision on that has not yet been made but it would come on top of the Friday tariff rate increase to 25% from 10% on $200 billion worth of Chinese imports.

Trump has claimed that China is paying for the tariffs but it is importers – usually U.S. companies or the U.S.-registered units of foreign companies – that have to pay. And U.S. farmers, a key constituency of Trump, have been among the hardest hit in the trade war, with soybean shipments to China dropping to a 16-year low in 2018.

Asked who was paying, Kudlow said on Sunday that “both sides will suffer on this,” although he added that the U.S. economy should be able to cope.

“We’re in terrific shape in order to correct 20 years plus of unfair trading practices with China … I think this is a risk we should and can take without damaging our economy in any appreciable way,” he said.

Reporting by Humeyra Pamuk and Ben Blanchard, additional reporting by Brenda Goh in Shanghai; Writing by Humeyra Pamuk; Editing by Lisa Shumaker and Rosalba O’Brien

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Trump says Beijing ‘broke’ trade talk deals, pledges to keep tariffs on Chinese goods

Trump says Beijing 'broke' trade talk deals, pledges to keep tariffs on Chinese goods

PANAMA CITY, Fla./WASHINGTON (Reuters) – U.S. President Donald Trump said on Wednesday that China “broke the deal” it had reached in trade talks with the United States, and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing “stops cheating our workers.”

The U.S. Trade Representative’s office announced that tariffs on $200 billion worth of Chinese goods would increase to 25 percent from 10 percent at 12:01 a.m. (0401) GMT on Friday, right in the middle of two days of meetings between Chinese Vice Premier Liu He and Trump’s top trade officials in Washington.

Speaking to supporters at a rally in Florida on Wednesday, Trump accused China of breaking the deal and that Beijing would pay if no agreement is reached.

“I just announced that we’ll increase tariffs on China and we won’t back down until China stops cheating our workers and stealing our jobs, and that’s what’s going to happen, otherwise we don’t have to do business with them,” Trump told a cheering crowd.

“They broke the deal,” he added. “They can’t do that. So they’ll be paying. If we don’t make the deal, nothing wrong with taking in more than $100 billion a year.”

Trump’s comments fueled a round of selling in Asian markets

Beijing has announced it would retaliate if tariffs rise.

“The Chinese side deeply regrets that if the U.S. tariff measures are implemented, China will have to take necessary countermeasures,” China’s Commerce Ministry said on its website, without elaborating.

The world’s two largest economies have been embroiled in a tit-for-tat tariff war since July 2018 over U.S. demands that the Asian powerhouse adopt policy changes that would, among other things, better protect American intellectual property and make China’s market more accessible to U.S. companies.

Expectations were recently riding high that a deal could be reached, but a deep rift over the language of the proposed agreement opened up last weekend.

Reuters, citing U.S. government and private-sector sources, reported on Wednesday that China had backtracked on almost all aspects of a draft trade agreement, threatening to blow up the negotiations and prompting Trump to order the tariff increase.

Trump, who has embraced largely protectionist policies as part of his “America First” agenda, warned China on Wednesday that it was mistaken if it hoped to delay a trade deal until a Democrat controlled the White House.

“The reason for the China pullback & attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to ‘negotiate’ with Joe Biden or one of the very weak Democrats,” Trump, a Republican, tweeted on Wednesday.

“Guess what, that’s not going to happen! China has just informed us that they (Vice-Premier) are now coming to the U.S. to make a deal. We’ll see, but I am very happy with over $100 Billion a year in Tariffs filling U.S. coffers,” he added.

In response, Biden’s deputy campaign manager, Kate Bedingfield, criticized Trump, saying on Twitter that U.S. farmers, small-business owners and consumers were the ones hit by the tariff battle.

Speaking to reporters, White House Press Secretary Sarah Sanders said the Trump administration had received an “indication” that China wants an agreement.

U.S. stock indexes rebounded slightly from this week’s earlier losses after her comments, but the S&P 500 and the Nasdaq closed in negative territory amid caution over trade and some disappointing earnings.

SWEEPING CHANGES

Washington is demanding Beijing make sweeping changes to its trade and regulatory practices, including protecting U.S. intellectual property from theft and forced transfers to Chinese firms, curbs on Chinese government subsidies and increased American access to China’s markets.

Trump also has sought massive hikes in Chinese purchases of U.S. farm, energy and manufactured products to shrink a gaping U.S. trade deficit with China.

FILE PHOTO: U.S. President Donald Trump waves during joint statements with China’s President Xi Jinping at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Thomas Peter/File Photo

Sources familiar with the talks said China’s latest demands for changes to a 150-page document that had been drafted over several months would make it hard to avoid the U.S. tariff hike on Friday. That increase would affect Chinese imports from computer modems and routers to vacuum cleaners, furniture, lighting and building materials.

Scott Kennedy, a China expert at the Center for Strategic and International Studies in Washington, said the talks were at a delicate stage and much depended on what sort of proposal Liu is bringing to Washington.

“I think the Trump administration is quite serious about imposing tariffs,” Kennedy said. “I don’t think Liu He would have agreed to come if he was just going to give the U.S. a lecture.”

Reporting by Jeff Mason in Panama City, Florida, and David Lawder in Washington; Additional reporting by Makini Brice in Washington; Writing by Chris Prentice and David Alexander; Editing by Paul Simao, Lisa Shumaker and Peter Cooney

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DoubleLine’s Gundlach says new U.S. tariffs on China likely

DoubleLine's Gundlach says new U.S. tariffs on China likely

FILE PHOTO: Jeffrey Gundlach, Chief Executive Officer, DoubleLine Capital LP., speaks at the Sohn Investment Conference in New York City, U.S. May 4, 2016. REUTERS/Brendan McDermid

(Reuters) – Jeffrey Gundlach, chief executive officer at DoubleLine Capital, said on CNBC on Tuesday that he sees a better than 50% chance that new tariffs will happen.

Wall Street’s main indexes tumbled more than 1 percent on Tuesday, as the latest turn in trade negotiations with China stoked global growth worries and kept investors away from risky assets.

“I think we are going to keep seeing more tension,” said Gundlach. “I think the 25% tariff bump is better than 50% chance. The market obviously does not want to see increased tariffs, so it’s been kind of reacting to that.”

Asked if he believes U.S. stocks are in a bear market: “Of course we are,” Gundlach said. The U.S. stock market “has gone nowhere in 15 months.”

DoubleLine Capital oversees more than $130 billion in assets under management.

Reporting by Jennifer Ablan; Editing by David Gregorio

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