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Info Service on WTO and Trade Issues (Apr25/22) Yerevan, 24 Apr (D. Ravi Kanth) — The Trump administration’s tariff and trade war against China is seemingly showing signs of cracks for the first time, as moves appear to be underway to slash tariffs on Chinese goods entering the American market, but China remains firm in its view that while its “doors are wide open”, it will not negotiate under threats and coercion, media reports have suggested. The first signs of climbing down from the 145% tariff on Chinese goods entering the US market were suggested by US President Donald Trump on 22 April, when he made several remarks that indicate that Washington is planning to substantially lower its tariffs against China. On 23 April, the Wall Street Journal (WSJ) reported that “the Trump administration is considering slashing its steep tariffs on Chinese imports – in some cases by more than half – in a bid to de-escalate tensions with Beijing that have roiled global trade and investment, according to people familiar with the mater.” However, the WSJ said “President Trump hasn’t made a final determination,” suggesting that “the discussions remain fluid and several options are on the table.” The trigger for the turnaround in the Trump administration’s tariff and trade war against China appears to be the continued turmoil in the stock and currency markets. However, it is not clear whether credible progress is being made with the various countries that Washington is supposedly talking with right now, including Japan. The only country that appears to be claiming progress is India, though there is no clarity yet on what issues progress is being made. Both India and the US said that they are finalizing the terms of reference for the proposed bilateral free trade agreement that is expected to be concluded by end-October. Speaking to media persons on 22 April, President Trump made a rather long statement on whether he is going to negotiate with China or will continue to impose the tariffs that he had previously announced. He said that he is not going “to play hardball with China”, adding that things “are going to be very nice.” When asked why China is not joining the consultations, President Trump said “we will see what happens.” “But ultimately, they have to make a deal, because otherwise they’re not going to be able to deal in the United States,” President Trump said, suggesting that “we want them involved, but they have to, and other countries have to make a deal.” If China doesn’t make a deal, President Trump said “we’ll set a deal, because we are the ones that set the deal.” Further, “We’re going to be setting the deal and it’ll be a fair deal for everybody and it will be, I think it’s a process that’s going to go pretty quickly; we have spoken to many , many countries and we are getting their views on things, you know,” President Trump said. After blaming the European Union as the source of the problem, as it was allegedly “set up to take advantage of the United States, but they are not doing anymore,” President Trump said the 145% tariff on Chinese goods entering the US market “is very high, and it won’t be that high. I am not going up to there. We were talking about fentanyl, where, you know, various elements built it up to 145%.” So far, the Trump administration has imposed a range of tariffs on China starting with a fentanyl-related tariff of 20% on Chinese goods and a 25% tariff on steel and aluminum products. On 2 April, the Trump administration announced a reciprocal tariff of 34% on Chinese goods entering the US market while simultaneously imposing a baseline tariff of 10% on all imported goods coming into the US. In his remarks on 22 April, President Trump said the tariffs on China “won’t be anywhere near that high. It’ll come down substantially. But it won’t be zero.” After launching a tariff and trade war against China, President Trump said somewhat bewilderingly that “we’re going to be very good to China, have a great relationship with President Xi.” And in the same tone, President Trump said: “But they would make billions and billions and billions of dollars a year, and they would build their military out of the United States and what they made. So, that won’t happen. But they’re going to do very well, and I think they’re going to be happy, and I think we’re going to live together very happily and ideally work together. So I think it’s going to work out very well.” The remarks made by President Trump appear to lack consistency while being rather hyperbolic, suggested several analysts and media reports. CHINA STANDS FIRM In a somewhat measured response to the statements made by President Trump and his Treasury Secretary, China’s foreign ministry spokesperson Guo Jiakun said that “China has long stated that there are no winners in trade or tariff wars, that protectionism leads nowhere, and that attempts to decouple or sever supply chains will only result in self-isolation.” The Chinese foreign ministry spokesperson said that Beijing’s “position on the US-initiated tariff war is clear: we do not want a trade war, but we are not afraid of one: if it comes to a fight, we will fight to the end; if it’s negotiations, our doors are wide open.” Mr Guo emphasized that “if the US truly wishes to resolve issues through negotiations, it should stop threatening and coercing, and engage in talks with China based on equality, mutual respect, and reciprocity.” “Saying that it wants a trade deal with China, while continuing maximum pressure is not the right way to engage with China, nor will it work,” the spokesperson said, according to a news report in China’s Global Times. It is against this backdrop that the WSJ’s exclusive report on 23 April, titled “White House Considers Slashing China Tariffs to De-escalate Trade War “, assumes importance. According to the WSJ’s report, “One senior White House official said the China tariffs were likely to come down to between roughly 50% and 65%. The administration is also considering a tiered approach similar to the one proposed by the House committee on China late last year: 35% levies for items the US deems not a threat to national security, and at least 100% for items deemed as strategic to America’s interest, some of the people said.” As previously reported in the SUNS, the Trump administration sought to use the ongoing tariff negotiations to pressure US trading partners to limit their dealings with China. According to the WSJ report, “Still, Treasury Secretary Scott Bessent has said there is room for talks on a potential trade deal between the US and China. Such talks would have to involve Trump and Chinese President Xi Jinping, though the two haven’t talked since Trump regained the White House.” “MISSION CREEP” Meanwhile, in a separate development concerning the US involvement in the International Monetary Fund (IMF) and the World Bank, the US Treasury Secretary, Mr Bessent, said the IMF and World Bank must eschew their “sprawling and unfocused agendas” on climate change and gender issues, according to a report in the Financial Times on 23 April. Against the backdrop of continued fears that the US may withdraw from these two Bretton Woods institutions, the US Treasury Secretary said, “the IMF and World Bank have enduring value. But mission creep has knocked these institutions off course.” Bessent suggested that the IMF was becoming too close to Beijing, while he urged the World Bank to be “tech- neutral” and invest in gas and other fossil fuel-based energy production. +
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