The US-China trade war: where are we now?

London (AFP) –


For the second time in as many months, US President Donald Trump suggested Thursday that Washington and Beijing were on the brink of a major trade agreement.

Trump, as a result, may cancel fresh tariffs on $160 billion in Chinese imports that are set to kick in on Sunday and slash existing import duties as well, according to a media report.

But where would this leave the two sides 20 months after the conflict began?

- Tariffs on hold? -

If Trump does indeed call off Sunday's tariffs, it will mark the second time in 2019 he has refrained from acting on a threat.

Duties on $250 billion in Chinese goods had been due to rise to 30 percent from 25 percent on October 1.

But Trump initially postponed and then called this increase off, announcing on October 11 that the two sides had reached a "very substantial phase one deal" that they have since struggled to put in writing.

China, meanwhile, delayed new tariffs on 16 categories of US goods until September 2020.

More than $350 billion in Chinese merchandise is currently subject to punitive duties imposed during the trade war, something Trump hopes will push Beijing to end what Washington regards as unfair trade practices.

If the tariffs set for December 15 do take effect -- hitting top-selling consumer items like mobile phones, shoes, sports apparel and toys -- virtually all Chinese goods exports to the United States will be covered by Trump's punitive new duties.

The Wall Street Journal reported Thursday that Trump was leaning toward canceling the December 15 tariffs and even slash duty rates on hundreds of billions of dollars in other Chinese imports in exchange for concessions from Beijing.

Beijing has mostly maxed out its ability to put tariffs on the roughly $120 billion in goods it imports from the United States.

- Will there be a deal? -

In a tweet on Thursday, Trump said the two sides were getting "VERY close to a BIG DEAL" but this is not the first time he has made nurtured grand hopes.

In October, Trump said a "very substantial phase one deal" was supposed to be signed in the following four weeks. He and Chinese counterpart Xi Jinping are still waiting.

In the interim, the president has said that, to the contrary, he has no firm deadline and that a deal could even wait until after next year's presidential elections.

- Major hurdles -

Chinese officials say they want some or all of the tariffs to be removed in addition to those that had been set to take effect on Sunday.

Trump has also called on Beijing to commit to massive purchases of US farm exports, to take additional measures to protect intellectual property, end the forced transfer of proprietary technology and open Chinese markets wider to American financial services.

So far, Washington says US sanctions on the Chinese telecoms giant Huawei, which American officials accuse of violating US sanctions on Iran and claim is a tool of Chinese espionage, are a separate matter.

But it remains an obvious way for Washington to offer concessions to Beijing and Trump has said the two could be addressed together.

- Negotiating -

Top White House economic aide Larry Kudlow said December 6 that the two sides were talking on a near-daily basis but no face-to-face meetings have been announced.

- Economic fallout -

The conflict has depressed trade between the United States and China. Through October, two-way goods trade has fallen nine percent to $469.8 billion, according to US Commerce Department figures.

US exports to China over that period are down 15 percent while imports from China have sunk seven percent.

The trade war has helped push the global manufacturing sector into decline, including in the United States, and created uncertainty for businesses, which have refrained from investing.

While slowing, the American economy has outperformed recent expectations. China's economy has also slowed, hitting its slowest pace in 27 years in the third quarter of 2019.