The world’s two largest economies are nearing the finish line on a trade deal that could be signed by President Donald Trump and his Chinese counterpart Xi Jinping as early as this month. But that doesn’t mean the trade war ends.
More work remains on a deal that will ensure that Beijing will follow through on its commitments, U.S. Trade Representative Robert Lighthizer told Congress last week. Days later, Trump warned he can still walk out on China like he did with North Korean leader Kim Jong Un at their summit over a nuclear deal in Vietnam.
There was a sign of de-escalation on Tuesday, when the U.S. confirmed it’s postponing “until further notice” a scheduled tariff increase on Chinese goods. It had been set to take effect March 1, but now the rate will remain at 10 percent, according to a statement from the U.S. Trade Representative’s office.
Here’s the latest on where the U.S.-China trade negotiations stand.
Tariffs Truce?
China wants Trump to remove tariffs that he imposed last year on $200 billion of Chinese goods, but it’s not yet clear if the president will roll back some or all of the duties. (The U.S. duties on $200 billion of Chinese imports come on top of a first round on $50 billion of goods, which Beijing will also wants to see eliminated.)
There are competing forces inside the Trump administration that are debating how wise it would be to lift the duties on the first day of a deal because keeping some of the tariffs in place would allow the U.S. to maintain leverage.
Some advisers argue that the tariffs should only be fully removed once China lives up to all of its pledges, which could take months or even years. Even if some or most tariffs are removed at the outset they could come back as part of the enforcement mechanism, to punish China if it breaks the terms of any trade deal, Lighthizer said last week.
Still, the U.S. president has repeatedly delayed implementing higher duties on goods to give the two sides more time to strike a broad deal.
Enforcement Piece