Pause in US-China trade war

(VOVWORLD) - The US and China resumed trade talks a few days ago after US President Donald Trump and Chinese President Xi Jinping agreed to suspend tariffs on each other’s goods. But the tariff suspension is temporary unless the two countries resolve their trade differences.

The US-China trade war began a year ago. The Trump administration has imposed tariffs on 250 billion USD worth of Chinese goods and in return China has imposed tariffs on US goods worth 60 billion USD. Prior to talks between the two Presidents late last month in Japan, the US warned of additional tariffs of 25% on all remaining Chinese imports which are worth approximately 300 billion USD.

Halt but not end

At a meeting last Saturday on the sideline of the G20 Osaka Summit, President Trump agreed to ease some restrictions on Huawei, allow American tech companies to export spare parts to Huawei, and indefinitely delay tariffs on 300 billion USD worth of Chinese imports.

A White House adviser said these were not concessions and that Washington’s policy on Huawei’s 5G technology is unchanged, adding that selling chips and other low tech products to Huawei will not affect US national security. Selling chips to Huawei worth less than 1 billion USD a year is just a small step toward repairing the US-China trade relations. Trump said the Huawei issue will be discussed at the end of the trade talks which means the issue will depend on the overall US-China trade deal.

According to economists, Trump’s decision to delay the imposition of 25% tariffs on the remaining imports of China is just a temporary measure to reactivate trade talks. It was neither a breakthrough nor a guarantee that the US will not eventually impose the tariffs.

On track but instability remains

The US and China are now preparing for trade talks which have been suspended since the US accused China of ignoring commitments it had made regarding market approach, intellectual property rights and compulsory technology transfer. White House Commerce Adviser Peter Navarro said the two countries are on the right track but it will be difficult and take a long time to reach a trade deal because Washington wants a good deal. On July 1, President Trump said China has taken big advantage of its trade relationship with the US for many years and the US now wants it to be more in favor of the US.

Prior to the G20 Summit US Treasury Secretary Steve Mnuchin said the two countries had agreed on 90% of the trade deal, but the remaining 10% was the challenge which had made previous trade talks fail. The remaining 10% concerns China reducing its subsidies and ending its violation of intellectual property rights.