A fresh wave of US tariffs on Chinese imports was due to take effect on
December 15. However, this has been canceled for now.
President Donald Trump tweeted: “We
will begin negotiations on the phase two deal immediately, rather than waiting
until after the 2020 Election.
“This is an amazing deal for
all.”
If the new, higher tariffs had gone ahead, Chinese-made goods such as clothing,
smartphones, and toys would have become more expensive for Americans just ahead
of Christmas.
US negotiators are reportedly offering to significantly reduce existing tariffs
on about $360 billion worth of Chinese imports.
In return, China has promised to buy large quantities of US soybeans,
poultry and other agricultural products.
The agreement is a deal in principle, which means if China breaks any part of the agreement, the Trump administration has the ability to re-implement tariffs.
China stocks tumbled on May 6 after President
Donald Trump threatened new tariffs on Chinese goods, putting a trade deal in
doubt.
President Trump announced on Twitter that the US would more than double
tariffs on $200 billion of Chinese goods on May 3 and would introduce fresh
tariffs.
Recent comments had suggested both sides were nearing a trade deal.
A Chinese delegation was due to travel to Washington this week for talks
aimed at ending the trade war.
However, according to recent reports, China is now considering cancelling
those talks, led by Vice-Premier Liu He, that were scheduled to resume on May 8.
Some reports said the Chinese were due to send a 100-person delegation to
the negotiations.
The Chinese government has yet to officially comment on President Trump’s
tweets.
In China, Hong Kong’s Hang Seng index dropped 3.7%, while the Shanghai
Composite plunged 5.3%.
US stock futures pointed to a lower open on Wall Street.
On May 3, President Trump tweeted: “For 10 months, China has been paying Tariffs to the USA of 25% on 50
Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods.
These payments are partially responsible for our great economic results. The
10% will go up to 25% on Friday. 325 Billions Dollars….”
“The Trade Deal with China
continues, but too slowly, as they attempt to renegotiate. No!” he
continued.
After imposing duties on billions of dollars worth of one another’s goods
last year, the US and China have been negotiating and in recent weeks, appeared
to be close to striking a trade deal.
Last week US Treasury Secretary Steven Mnuchin described talks held in
Beijing as “productive”.
So far, the US has imposed tariffs on $250 billion of Chinese goods, having
accused China of unfair trade practices.
Beijing hit back with duties on $110 billion of American goods, blaming the
US for starting “the largest trade war in economic history”.
President Trump’s latest move will raise duties on more than 5,000 products
made by Chinese producers, ranging from chemicals to textiles and consumer
goods.
He originally imposed a 10% tariff on these goods in September that was due
to rise in January, but postponed this as negotiations advanced.
However, both US and international companies have said they are being harmed
by the trade war.
Fears about a further escalation caused a slump in world stock markets
towards the end of last year.
The IMF has warned a full-blown trade war would weaken the global economy.
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