Beijing weighing whether to re-engage with White House after US tariff threat

By Tom Mitchell and Yizhen Jia, MAY 6, 2019

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“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” Mr Trump said in a tweet.

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Robert Lighthizer, US trade representative, wants to roll back existing tariffs, which affect about half of all Chinese exports to the US, in phases. Mr Liu has argued for both sides to immediately repeal punitive tariffs imposed by their countries since the trade war erupted last summer. 

Wang Yong, an international trade expert at Peking University, said such haggling was not surprising as the two sides raced to finalise an agreement. “The Chinese side has begun to review the agreement internally, which has led the Chinese side to renegotiate some aspects,” said Prof Wang. “The biggest difference between the two sides is Trump’s insistence on retaining some tariffs. From a domestic political perspective, this is very difficult for China to accept.” 

Chinese officials and advisers are also confident that better than expected economic growth in the world’s second-largest economy, combined with Mr Xi’s intolerance of all forms of dissent, will strengthen Beijing’s hand while Mr Trump will have to contend with a political backlash at home. 

“Pressure in the US markets will appear soon,” said Prof Wang. “China is in a better negotiating position, so there is no need to rush. If they don’t want this agreement now, the US will lose more than China will.” 

Arthur Kroeber at Gavekal Research said: “It was always unrealistic to think that China would throw overboard its entire development model in order to secure a quick truce with the US.” He added that Mr Trump now faced a choice of having to “deliver his tariff increase”, which would almost certainly make markets tank, “or finding a face-saving way to claim that his threat forced some Chinese movement”. 

Over recent weeks, US farmers, financial markets and commercial groups have been looking forward to a resolution of the two countries’ year-long trade war, encouraged by optimistic statements about the talks from Mr Trump, Steven Mnuchin, the Treasury secretary, and Larry Kudlow, the White House economic adviser.

“The existing tariffs are damaging to American companies and consumers, and additional tariffs will compound those damages,” said Jake Parker, head of the US-China Business Council’s Beijing office. “Both sides need to use this week to make progress on the negotiations rather than returning us to tariff battles.” 

James Zimmerman, a Beijing-based partner at law firm Perkins Coie and former head of the American Chamber of Commerce in China, said Mr Trump’s surprise threats betrayed the US president’s “total misunderstanding on how to negotiate with the Chinese”. 

Last September, Mr Liu cancelled plans to travel to Washington for a critical negotiating round after Mr Trump followed through on a similar threat. Members of the vice-premier’s negotiating team have also said repeatedly that they will never negotiate “with a knife at our throat”. 

https://www.ft.com/content/6c5ac3ec-6fc4...10-2ba258aa73e0

That last few lines I put in bold seem to describe two variables in the story. Who is right? It's Trump against the "experts" [total misunderstanding] and the Chinese [knife at our throat won't do it].

Once again, I'm putting my money on Trump for this fight! Negotiations aren't for the faint-hearted. TM

Michael Pillsbury supports Trump's tariff negotiating stance

Following this topic a bit further...




What I find amusing is Trump's opposition from the "experts" as shown in a previous post: James Zimmerman, a Beijing-based partner at law firm Perkins Coie and former head of the American Chamber of Commerce in China, said Mr Trump’s surprise threats betrayed the US president’s “total misunderstanding on how to negotiate with the Chinese”.

Negotiations are Trump's specialty. He knows so well how to build pressure and to move a stubborn adversary toward his desired goal. His goals are not unreasonable!

But have the Chinese ever negotiated out in the open with a character who tweets his policy and concerns to the world? The truth is, the Chinese are the ones who are going to have to learn, and they're going to have to learn how to negotiate with Donald Trump. TM