US-China Trade Talks End Without A Deal After Trump Hikes Deficit Cut Demand

Moments ago, the US trade delegation led by Treasury Sec. Steven Mnuchin, and which included Commerce Sec. Wilbur Ross, US Trade Rep. Robert Lighthizer, and White House trade adviser Peter Navarro, left China after two days of U.S.-China trade discussions ended on Friday without a concrete deal, only an agreement to keep on talking.

On Friday afternoon, China’s official Xinhua News Agency reported that both sides reached a consensus on some trade issues, without providing details. More importantly, they acknowledged major disagreements on some matters and will continue communicating to work toward making more progress.

US Treasury secretary Steven Mnuchin (centre) and US Commerce Secretary Wilbur Ross (second from right) walk through a hotel lobby as they head to Diaoyutai state guest house to meet Chinese officials in Beijing

The biggest surprise, according to the FT, is that heading into the talks the US delegation asked China to cut the bilateral trade deficit by $200BN by 2020, reduce tariffs and cut subsidies for emerging industries, according to a document seen by the Financial Times.

The surprise is that the revised $200BN target is already double the $100BN amount that President Trump demanded just two months ago be wiped from last year’s $337BN US deficit in goods and services. According to the document, the US aimed to cut the deficit by $100bn in the year beginning June 1, and by a further $100bn between June 2019 and May 2020.

Some more details on the list of US demands from the WSJ:

  • The first U.S. request was for China to reduce the bilateral trade deficit by at least $200 billion by the end of 2020. The U.S.-China bilateral deficit in goods was $375 billion last year. President Donald Trump has repeatedly said he wants China to slash the figure by $100 billion a year.
  • The U.S. also demanded that China immediately stop providing subsidies and other assistance for advanced technologies outlined in the government’s Made in China 2025 plan. The initiative aims for China to dominate future frontiers of manufacturing and industry, from robotics and aviation to new-energy vehicles.
  • The U.S. also asked China to cut tariffs on “all products in non-critical sectors” to levels that are no higher than the levels that the U.S. applies to imports, according to the document.
  • In addition, the U.S. also asked China to guarantee that it won’t hit back at the U.S. for any actions taken in the disputes over intellectual property. It also asked that China withdraw its challenges in this area at the World Trade Organization.
  • Chinese officials believed the proposal was “unfair”

By early afternoon Friday neither side had flagged plans to give a briefing on the discussions, and the American team departed shortly after.

According to Bloomberg, earlier in the day Mnuchin said that the U.S. and China had been having a “very good conversation,” without elaborating. While China hasn’t indicated any detail on what it may be prepared to agree to, a senior official sounded a defiant tone ahead of the meeting, and the state news agency warned against “unreasonable demands”, a stark difference to the CNN rumor released on Thursday that the deals would be successful, and which sent the market soaring.

Foreign ministry spokeswoman Hua Chunying said at a Friday afternoon briefing there’s no specific information on the talks.

To be sure, the U.S. tempered expectations of a major breakthrough from the discussions, which were expected to focus on concerns over China’s state-driven economy, forced technology transfers and America’s widening trade deficit with China. Underscoring the friction, the US trade report released Thursday showed the trade gap with China surged by 16 percent to more than $91 billion in the first quarter of this year.

Quoted by Bloomberg, an unnamed senior Chinese government official said before the talks the government won’t accept U.S. preconditions for negotiations such as abandoning its long-term advanced manufacturing ambitions or narrowing the trade gap by $100 billion. We can only imagine what they said when they learned the latest demand was a $200 billion deficit cut.

During the second day of discussions, across town at Beijing’s Great Hall of the People, President Xi Jinping indicated China will continue to embrace globalism, saying it wants to actively take part in world governance. Those who reject the world will be rejected by the world, he said in a speech commemorating the 200th anniversary of Karl Marx’s birth.

The disappointing outcome will probably not come as a big surprise as analysts weren’t very optimistic about the potential outcomes beyond the two countries possibly delaying on the threat of tit-for-tat tariffs.

“Our expectations are low. The U.S. negotiating position is unclear -- indeed it’s not even clear if the U.S. representatives have a unified view on what they want to achieve,” Tom Orlik, chief economist at Bloomberg Economics in Beijing, wrote in a report. “The Chinese side has already made concessions and won’t rush to make more. The past few weeks have shown that markets can be roiled by tariff chatter, so that’s certainly a possibility in the next couple of days.”

If anything, the meetings were an opportunity for the two sides to exchange their views face to face after the official channel for U.S.-China high-level economic talks were suspended last year.

In response to the news, the yuan declined in the late afternoon, reversing earlier gains, and the USDCNH jumped from 6.3450 to 6.365 as news of the failure to reach an agreement spread. "The market has been disappointed as the China-U.S. trade talks failed to make a breakthrough" said Ken Cheung, Asian FX strategist at Mizuho Bank, adding that "this outcome increases the possibility for China to curb further yuan appreciation, given concerns over the negative impact from a trade conflict on the nation’s economic growth."

Having surged on the rumor of a favorable trade talk outcome yesterday, US stocks are unchanged today after the talks ended without any tangible success.

Comments

GUS100CORRINA Four Star Fri, 05/04/2018 - 06:48 Permalink

The TRADE DEFICIT NUMBERS with CHINA are BREATH TAKING.

Of course, EVERYONE knows that CHINA has gotten very comfortable with America's incompetent leadership for the last 30 years.

President TRUMP is the first POTUS in DECADES who actually gives a SHIT about America.

Getting these CHINA TRADE DEFICIT NUMBERS down is going to take a little more time. I just hope and pray that America has the time before it drives off the cliff into the abyss.

And who do we have to blame for the current CHINA TRADE DISASTER? BUSH I and II, CLINTON and "OBOZO". All of these guys were DEEP STATE OPERATIVES masquerading as POTUS OFFIVE HOLDERS.

In reply to by Four Star

GreatUncle GUS100CORRINA Fri, 05/04/2018 - 06:55 Permalink

I prefer globalist operatives ... deep state = globalist agenda because if it was not then the deep state would be replaced by another globalist group.

The globalists never stop if they lose they bring back over and over again until they win.

Hence for me in the UK nonexisitant-BREXIT will be the biggest stitch up of the UK population of all time and the globalist win once again.

Only WW3 will stop them no global world to be a globalist in.

In reply to by GUS100CORRINA

UndergroundPost GreatUncle Fri, 05/04/2018 - 07:15 Permalink

Communist filth. They overthrow China in the name of Atheism, killing up to 100 million Chinese in a murderous bloody revolution, install a dictatorship, ban freedom of speech & religion, destroy true private property, gain global economic status via mass slave labor & technology/IP theft ($600 billion / year!)...and we're focused on a $200 billion trade deficit adjustment? Good start but even better is this bill just launched in the Senate:

https://video.foxnews.com/v/5780160235001/?#sp=show-clips

In reply to by GreatUncle

rtb61 GUS100CORRINA Fri, 05/04/2018 - 09:26 Permalink

Simple change in focus. They wanted to break the backs of the unions, force workers to work in poverty and cripple the middle class, pursuing a greed first, last and everything in between policy, for the 0.1%. This is now leading to economic collapse, riots and possible revolution. So now they want to blame other countries for it and try to fix the problem without actually fixing the problems because unions still evil, the goal is still to get the majority of US workers, working in poverty, to hugely reduce their consumption of resources, whilst still screaming at them to buy more to drive growth because you need infinite growth to feed insatiable greed.

Negotiations are only temporarily secrete because the government of China has no need for secrets in this regard and it is only the US government who wishes to keep secrete the negotiations from the public probably because the public would be infuriated at the shallow greed based things being discussed by US representatives.

The only reason anything is happening is because, the incumbent government, the deep state, the shadow government, corporate main stream media, the leading tech companies, the military industrial complex, google, twitter and facebook, lost the last election (not some silly bitch corporate whore, a talking head nothing).

In reply to by GUS100CORRINA

CashMcCall bankbob Fri, 05/04/2018 - 12:59 Permalink

Hardball? How about some reality...

This quote should be on every refrigerator in America... "Trade Wars are Good and Easy to Win." Those were the words of the Genius Trump. This week Mnuchin, Ross, and Kudlow, the Three Trump wrist licking stooges embarked to China to negotiate a Trade Settlement. Trump wants to declare this a win but why are the three Stooges in China? Here's why: The Chinese canceled ALL US Soybean orders from US FARMERS! Read it and weep for the American Farmer.

Bloomberg reported the following:

"Whatever they're buying is non-U.S.," Soren Schroder, CEO of New York-based Bunge, the world's largest oilseeds processor, told Bloomberg in a phone interview.

China canceled a net 62,690 metric tons of U.S. soybean purchases in the two weeks ended April 19, the Bloomberg article pointed out, citing USDA data for the current marketing year.

The country is the second largest market for U.S. agricultural exports, and soybeans have historically have been one of the top products sold to the Asian giant, according to the U.S. Department of Agriculture Foreign Agricultural Service.

More simply since the TrumpStupids can't read... it says that China canceled ALL US SOYBEAN CONTRACTS with American Farmers. ALL GONE! 

 

"It ain't winning when you get your balls cut off in a Trade War you started." 

The Chinese can read Trump like a comic book. 

 

In reply to by bankbob

ketel83 Four Star Fri, 05/04/2018 - 07:30 Permalink

Great article and link - really ilucidates the deliberate economic policy of self destruction of the us - so many traitors in government since kennedy assas. and the  clear fingerprints of a long term deep state globalist policy of demolishing the us to kneel at the alter of world government.

In reply to by Four Star

buzzsaw99 Fri, 05/04/2018 - 06:22 Permalink

we need to go FULL TRUMPTARD BITCHEZ.

We gotta take these bastards. Now we could do it with conventional weapons, but that could take years and cost millions of lives. No, I think we have to go all out. I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part.  [/otter]

bentaxle Fri, 05/04/2018 - 06:26 Permalink

Desperation on part of US, clearly begging for Chinese "help." How the mighty have fallen, chopped off below the knee, by plutocrat capital being allowed to flow out to lowest cost producers. American competitiveness AND exceptionalism, not so exceptional now. Trade war to hot war in one simple move.

GreatUncle buzzsaw99 Fri, 05/04/2018 - 06:52 Permalink

I know ... we need trade tarrifs also to sort the trade deficit.

I purchase one part from China because I cannot make it myself in the UK because of all the government taxes you have to put on it. Mind you the company I used to work for bought all its gear from China and pretended to have a factory in the UK manufacturng it to the tune of millions!

Sick of it all the neocons pretending they manufacture stuff and ship it in from China.

In reply to by buzzsaw99

GreatUncle ilw4e Fri, 05/04/2018 - 07:04 Permalink

TBH should just shut all trade down and make for yourself righting the trade defecit to $0 in one go.

There is no negotiation on this and the real goal is to rebuild ones own economy whoever you are and force countries like China in the process to open up its consumerism for the goods it produces. China then becomes a more balanced as does the US.

 

In reply to by ilw4e

The Kalergi Plan Fri, 05/04/2018 - 06:35 Permalink

“The U.S. also demanded that China immediately stop providing subsidies and other assistance for advanced technologies outlined in the government’s Made in China 2025 plan.”

 

Telling China what they can and cannot do in their own fucking country???  The arrogance of the US never ceases to amaze me...

You Only Live Twice Fri, 05/04/2018 - 06:39 Permalink

I don't understand, but one of the most major contentious issues is never mentioned in any of these articles. Namely, that the United States wants China to abolish the rule requiring that Chinese banks be at least 51% Chinese-owned. This point is a major one for the Chinese.