US President Donald Trump looks on during a meeting with China's vice-premier Liu He and US trade representative Robert Lighthizer, right, in the Oval Office at the White House in Washington, the US, February 22 2019. Picture: REUTERS/CARLOS BARRIA
US President Donald Trump looks on during a meeting with China's vice-premier Liu He and US trade representative Robert Lighthizer, right, in the Oval Office at the White House in Washington, the US, February 22 2019. Picture: REUTERS/CARLOS BARRIA

Washington — President Donald Trump’s decision to delay a steep tariff hike on Chinese goods as he touted progress in weekend trade talks was greeted with a mixture of relief and dread among US industry groups and legislators on Monday. 

Some expressed concerns that after nearly eight months of tit-for-tat tariffs roiling global financial markets, disrupting manufacturing supply chains and shrinking US farm exports, Trump could end up settling for a deal that increases commodity sales to Beijing while doing little to change China’s underlying trade practices and industrial policies.

Trump announced the delay on Sunday, without giving specifics, after his top trade negotiator, Robert Lighthizer, and Chinese vice-president Liu He wrapped up seven days of “very productive talks”.

Tariffs on $200bn worth of Chinese imports had been set to rise to a prohibitive 25% from the current 10% if no deal was reached by Friday.

“Glad 2 hear that Pres Trump won’t be increasing tariffs on China March 1 but I hope Lighthizer/Trump won’t take a half deal as a good deal,” tweeted senator Chuck Grassley, the Republican chairman of the trade and tax-focused senate finance committee.

'Structural changes'

“We need to have legitimate structural changes  and enforcement in China or else they will continue cheating  and stealing our IP/trade secrets,” said Grassley, who is from Iowa, a state hard hit by China’s retaliatory duties on US soya beans.

The Trump administration has been pressing China for specific commitments for sweeping changes to protect intellectual property rights, end cyber-theft of trade secrets and practices that coerce US companies to turn over technology to Chinese firms.

The US also wants to curb Beijing’s industrial subsidies, which Washington says fuels excess production.

In his February 5 state of the union address, Trump said a China trade deal “must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs”.

But as the March 1 deadline drew closer, Trump appeared increasingly eager to make a deal, saying on several occasions that he might extend the deadline, causing concerns among trade watchers that he was eroding Lighthizer’s leverage in the talks.

“Trump has clearly put his negotiators on notice that he wants a deal,” said Eswar Prasad, a trade professor at Cornell University and former head of the IMF’s China department.

“This raises the chances of a deal but makes it harder for the US to pressure China into making significant concessions related to its industrial and economic strategies.”

Trump has issued positive but cryptic statements and tweets about the delay and the nature of progress made at the weekend, saying that a deal with Beijing is “very, very close” and talking about a “signing summit” with Chinese President Xi Jinping.

Farmers “will be treated better than they have ever been treated before!” if a deal is made, he tweeted.

While some industry groups, including the Retail Industry Leaders Association, cheered the delay for averting price increases on thousands of consumer goods, others simply called the delay “encouraging”.

National Association of Manufacturers CEO Jay Timmons urged Trump to press ahead “with a rules-based agreement that ends [China’s] intellectual property theft and other significant unfair trade practices”.

Democrats in Congress were more pointed, saying Trump should be prepared to walk away from a bad deal.

“China’s forced technology transfers and IP theft practices are unfair and must be addressed,” said Earl Blumenauer of Oregon, the new Democratic chairman of the house ways and means trade subcommittee.

“A simple commodities sales agreement does nothing to fix these problems,” he said

Lighthizer, who has been arguing for a tougher US stance on reforms to the Chinese economy for years, will update legislators on the progress of the talks when he testifies before the ways and means committee on Wednesday.
Reuters