President Donald Trump’s top trade negotiator said the U.S. plans to raise tariffs on Chinese goods on Friday, accusing Beijing of backpedaling on commitments it made during negotiations.
Still, the trade talks will continue and a Chinese delegation will visit Washington on Thursday and Friday, U.S. Trade Representative Robert Lighthizer told reporters Monday in Washington. Amid those discussions, the Trump administration plans to increase duties on Chinese imports at 12:01 a.m. on May 10, he said.
“We felt we were on track to get somewhere. Over the course of last week we have seen an erosion of commitments by China,” Lighthizer said, adding that significant issues remain unresolved, including whether tariffs will remain in place.
Standard & Poor’s 500 futures fell on the news, along with trade-sensitive stocks including Caterpillar Inc., Apple Inc. and Deere & Co. Semiconductor shares also declined.
Yield on 10-year U.S. Treasury fell six basis points to 2.47 percent Monday, with most of the decline coming late in the New York day on the back of the tariff news. The dollar fell against the yen and extended its decline early Asia-Pacific trading Tuesday, although it held above lows from early Monday. The Chinese yuan resumed its slide, having recovered from some of its losses from the prior Asia session.
Over the weekend, it became clear that China was pulling back on language in the text on a number of issues, which had the potential to dramatically change the deal, Treasury Secretary Steven Mnuchin said at the briefing in Washington. The U.S. isn’t willing to re-negotiate previous commitments, said Mnuchin, adding that about 90 percent of the pact had been finalized.
The state of the trade talks were cast into doubt after Trump’s surprise announcement over Twitter on Sunday that he planned to raise tariffs on $200 billion of Chinese goods to 25 percent from 10 percent because talks on a deal with China were moving too slowly. The president said he may also impose duties “shortly” on $325 billion of Chinese goods that aren’t currently covered, a move that would hit virtually all imports from the Asian nation.
The tariff announcement reignited trade tensions between the world’s two-largest economies, which have been locked in a trade war since last year, pushing down the yuan and rattling investors across the globe. It marked an abrupt shift in tone for Trump who as recently as Friday said that talks were progressing well.
U.S. officials said they haven’t been in contact with Chinese Vice Premier Liu He in the past 24 hours. Liu, China’s top negotiation in the talks, was expected to attend this week’s discussions in Washington, but it wasn’t clear Monday if he would still lead the Chinese delegation.
People familiar with the matter said that during talks last week in Beijing, Chinese officials told their U.S. counterparts they would not agree to a trade deal that required revisions to Chinese law. China had previously agreed to change its laws as part of the deal, they said.
The change has major implications for provisions of the pact aimed at ending a Chinese practice of forcing U.S. companies seeking to do business in the country to reveal proprietary technologies and other intellectual property.
Lighthizer thought that issues around what’s known as forced technology transfer were resolved and considered the Chinese position on changing its laws to be an attempt to renegotiate, the people said. Lighthizer was angered by the move and briefed Trump.
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