Washington must roll back punitive tariffs on Chinese imports if the two sides reach a trade deal, China said Thursday, indicating Beijing is sticking to its position ahead of another possible Dec. 15 duty increase.
The two sides are negotiating details of a “Phase 1” agreement announced by President Donald Trump in October. Beijing said last month the U.S. side agreed to roll back some tariffs, but Trump dismissed that.
“China believes that if the two parties reach a ‘Phase 1’ agreement, tariffs should be reduced accordingly,” said a Commerce Ministry spokesman, Gao Feng.
Gao said negotiators are in “close communication” but he had no other details.
The two sides have raised tariffs on billions of dollars of each other’s imports in the fight over Beijing’s technology ambitions and trade surplus. That has disrupted global trade and threatens to chill economic growth.
Washington is due to raise tariffs on an additional $160 billion of Chinese imports on Dec. 15, including smartphones and toys. That will extend penalties to almost everything the United States buys from China.
Global financial markets tumbled this week after Trump cast doubt on whether an agreement can be reached this year.
Details of the Oct. 12 agreement have yet to be released. But it doesn’t address basic disputes about trade, Chinese industrial subsidies and technology policy.
Economists say a final settlement is unlikely this year. Some express skepticism the two sides can complete the “Phase 1” deal.
US Trade Gap Narrows 7.6% to $47.2B in October
The U.S. trade deficit narrowed in October as imports fell faster than exports. The politically sensitive trade gap with China dropped.
The Commerce Department said Thursday that the gap between what America sells and what it buys abroad dropped 7.6% to $47.2 billion in October. Imports tumbled 1.7% to $254.3 billion on reduced purchases of foreign oil, cars and auto parts and pharmaceuticals. Exports dipped 0.2% to $207.1 billion on a drop in sales of soybeans and aircraft engines.
The deficit in the trade of goods with China narrowed by 1.1% to $31.3 billion in October and is down 14.6% so far this year. The goods deficit with Mexico dropped 1.4% to $8.8 billion but is up 28% so far in 2019.
President Donald Trump, declaring persistent trade deficits a sign of U.S. economic weakness, has slapped taxes on imported steel and aluminum and hundreds of Chinese goods and has sought to replace a North American free trade pact that he says puts U.S. factories at a disadvantage to low-wage plants in Mexico. Congress has yet to ratify the revamped version he negotiated last year with Mexico and Canada.
The trade gap is still 1.3% wider so far this year than it was in January-October 2018, despite dropping in September and October.
Mainstream economists say the trade deficit reflects an economic reality that doesn’t yield much to changes in government policy: Americans consume more than they produce, and imports fill the gap.
A strong dollar is another consistent obstacle to more balanced trade. The American currency is widely used in international business transactions and is therefore in high demand, propping up its value and putting American exports at a price disadvantage in world markets.
In October, the United States ran a $68 billion deficit in the trade of goods such as autos and appliances. But it ran a $20.8 billion surplus in services, including education and banking.
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