US-China Trade Negotiations Have Collapsed

High-level trade negotiations between Beijing and Washington have "ground to a halt" following Trump's dramatic escalation proposing an additional $200 billion in tariffs on Chinese goods, Bloomberg reports.

After three rounds of formal negotiations led by Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin, communications between senior members of the Trump and Xi administrations have collapsed - with no immediate plans to restart formal talks.

The diplomatic impasse makes it unlikely the two countries will stand down anytime soon from an intensifying trade war that is roiling financial markets and threatening the broadest global upswing in years. The Trump administration on Tuesday released a proposed list of an additional $200 billion in Chinese goods to be hit with tariffs. China’s Commerce Ministry said the tariffs, which cover everything from refrigerators to handbags, are “totally unacceptable.” -Bloomberg

And while the two countries have continued to engage in informal dialogue among lower-level bureaucrats, Washington and Beijing have around seven weeks to strike a deal or risk a trade war that would be incredibly disruptive to corporate supply chains - stoking fears over increased prices for consumers.

“It’s extremely important that when two governments get into this kind of situation with each other that even if they are fighting on the official front, that they have something going on in the background that enables them at some point to declare a sort of ceasefire,” National Foreign Trade Council president Rufus Yerxa in a Bloomberg TV interview on Wednesday. “For the time being the two sides aren’t going to acknowledge that. They’re positioning themselves for the end game.”

Despite the flare-up in tensions amid the $200 billion tariff proposal, President Trump has continued to emphasize his personal friendship with President Xi Jinping - while the Trump administration has been signaling that they would like to re-engage China at the "top level," according to Bloomberg

That said, frustration continues to mount. 

there are growing signs of frustration on both sides. On a conference call with reporters Tuesday, senior Trump administration officials argued that China started the conflict with unfair trading practices and abuse of U.S. intellectual property. One of the officials said the U.S. has repeatedly made its concerns clear and continues to hope for a negotiated solution, but Beijing hasn’t changed its behavior. -Bloomberg

Mixed signals

Ongoing tensions between Steve Mnuchin and Wilbur Ross have complicated matters and resulted in mixed messages, according to Bloomberg's sources. 

As the de facto spokesman on economic matters within the cabinet, Mnuchin took the lead early in the negotiations. But at different points in the talks, other more hawkish members of the administration have taken the helm, such Ross, which has confused the Chinese. -Bloomberg

President Trump is also said to have grown frustrated with China's reluctance to come to the table with more concessions - particularly after the United States reversed a decision to impose harsh restrictions on Chinese telecom-equipment manufacturer ZTE Corp., according to a White House official who did not want to be identified. 

Trump also doesn't think China has been very helpful with regards to encouraging North Korea to abandon their nuclear weapons program. 

“We agreed to the denuclearization of North Korea,” Trump tweeted on Monday. “China, on the other hand, may be exerting negative pressure on a deal because of our posture on Chinese Trade-Hope Not!”

Meanwhile, Chuck Grassley (R-IA) has a “great deal of concern” about the friction with China - and in particular, the uncertainty it’s creating among Iowa farmers and businesses. Soy futures, a target long expected for China’s retaliation, have fallen around 16% since the end of May making life for US farmers especially painful.

Comments

DingleBarryObummer silverer Wed, 07/11/2018 - 19:34 Permalink

This is a good start and I applaud Trump, but it's peanuts, we need MOAR...

“At this stage, if you look at the numbers — so an additional $200 billion of tariffs, 10% on those — that adds up to about 0.1% of U.S. GDP,” Turnill said in a Bloomberg Radio interview.
https://www.marketwatch.com/story/worlds-largest-asset-manager-its-not-…

Stawks have barely flinched so why not go full balls?

Donald J. Trump said he would favor a 45 percent tariff on Chinese exports to the United States, proposing the idea during a wide-ranging meeting with members of the editorial board of The New York Times - Jan 2016
https://www.nytimes.com/politics/first-draft/2016/01/07/donald-trump-sa…

In reply to by silverer

Dutti DingleBarryObummer Wed, 07/11/2018 - 19:43 Permalink

Winning all the way:

Less garbage imports from China, an adversary who has obviously been stealing, cheating and spying on a government level against US interests.

A little less consumerism in the US and additional revenue (import duties).

Incentives for companies to produce more in the US and therefore benefitting US workers.

Go Trump! But please leave the European gas imports from Russia alone!

 

In reply to by DingleBarryObummer

Rapunzal Dutti Wed, 07/11/2018 - 19:49 Permalink

Kabuki theater. All politicians are puppets to the banksters. When they want the economy grows or collapses. They control the economic cycles. The only thing they are actually worried too many people find out about it. That’s why they create non stop useless news. All about control.

In reply to by Dutti

swmnguy Gaius Frakkin'… Wed, 07/11/2018 - 20:39 Permalink

You're correct.  It is about survival for people who live paycheck to paycheck, which is over half of America.  And nobody on top has any idea.  I remember telling a story about having a crappy unreliable car, and how dealing with it nearly cost me my job at the time, and how ironic and horrible that was because if I had been making the money to fix the darn car in the first place I wouldn't have had the issue with the job...and the (very kind and empathetic) friend of mine whose father was a multi-millionaire said, "You should get a Mercedes.  They're very reliable."

He simply had no way of understanding that a guy whose parents had nothing, who was working for about half-again minimum wage, who could barely afford car insurance, who could only spend $300 on a car (this was 1988); that guy couldn't buy a Mercedes.

 

In reply to by Gaius Frakkin'…

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In reply to by Mr.Sono

vato poco Adolfsteinbergovitch Thu, 07/12/2018 - 02:52 Permalink

TRADE NEGOTIATIONS HAVE COLLAPSED!!!! oh no!! whatever shall we DO?!?!

how 'bout this: since we're the party in this negotiation with all the A) money and thus B) power, how 'bout we .... 

wait calmly til china comes crawling back to the bargaining table, humiliated in the eyes of the entire world, having lost o so very much face. then we strike a deal with terms even more favorable to us than before, to teach them a valuable lesson about messing with Big Dogs.

"My idea about ending the Cold War? Simple: we win, they lose" - Reagan

In reply to by Adolfsteinbergovitch

One of these i… swmnguy Wed, 07/11/2018 - 21:42 Permalink

In 1996 or therabouts I bought a perfectly serviceable mercedes 2.0 off a guys drive for £200.  

Wasn't the most pristine example on the road but it was big and worked well enough.

I drove it around for a while and sold it on... True story. I've bought a BMW 5 series for 2-300 quid (I can't remember which) and it was a bit troubles ome but it went like stink, and I rented it out at one point... And my cheapest serviceable jaguar was £140, (got three months insanity out of that one plus a 320 quid profit when I sold it. I am handy with the small stuff, to be fair, and the small stuff can tarnish even the best cars to the point where people just want rid of them. (Fools!)

His was good advice, for someone like me.

A 500 quid quality car is way better than a 500 quid ford/vauxhall/renault/nissan/toyota etc, if you are me.

In reply to by swmnguy

Uchtdorf DingleBarryObummer Wed, 07/11/2018 - 20:29 Permalink

He's using Air Force bomber terminology. The bomb bay doors are open and the bombs can be dropped on the target. However, the truth is actually less exciting. All this trade war talk is a distraction from the debt-laden economy.

By the way, you might want to rethink your support of duties. When has taking our taxes and giving them to a profligate government helped anyone but the elites? Please keep your generosity out of my pockets.

In reply to by DingleBarryObummer

JibjeResearch Quantify Wed, 07/11/2018 - 20:15 Permalink

Yeah, but China saw that coming miles away lolz ahahahaha

We can't win in a trade war.. because the Yuan/USD is 6/1!

There are many clumsy people on ZH, they can't understand the Yuan/USD ratio relative to global trade.

 

Imagine if the Yuan/USD is 10/1 ...lolz..... it'll be a $1 Trillion trade deficit!

So,... get the fucken marginal cost down.. and produce shits in America.

Then beat China on the global trade on other markets. 

Beat China is not to fight China on China's market because of the Yuan/USD ratio.

In reply to by Quantify

JibjeResearch Justin Case Wed, 07/11/2018 - 21:29 Permalink

It's corporate America country.  The shareholders benefit at the expense of the workers.

This is capitalism which means wealth eventually moves to the top.

Anyway, I don't think too much for short or medium term because the long term will be the same.

The future is 5G, IoT, AIs, Robots, and blockchain because it's the 21st Century tech.  Product and services will take a back seat because it's 20th Century's tech.

There'll be a large war to rearrange the pecking order.  I hope it will not happen.

 

In reply to by Justin Case

JibjeResearch DingleBarryObummer Wed, 07/11/2018 - 21:35 Permalink

A long term trade surplus will require AIs, Robots, and blockchain technologies because there's no way in hell that the American labors will accept a cheaper wage than Chinese! 

 

And how is your Trump doing for speeding up the process...?

More DoD spending?

More social benefit spending?

More sanctions?

Dude, we need friends to do/create businesses!

 

 

In reply to by DingleBarryObummer

JBL DingleBarryObummer Wed, 07/11/2018 - 21:03 Permalink

i hav bad news for you buddy...jerbs aint comin back cuz our banker buddies have gotten almost everybody in debt to inflate fixed asset prices. no manufacturers gunna pay top dollar when the option of wage arbitrage is available to them. they'll just move to vietnam, cambodia, or hell, they'd rather automate their manufacturing process w robotics than to pay high wages

 

:('''''''''''''''''''

In reply to by DingleBarryObummer