China trade: tariff and non-tariff barriers

Dwayne Harmon
February 28, 2019

A report from China's official news agency Xinhua also noted "substantial progress" on specific issues such as technology transfer, intellectual property protection and agriculture. And as long as a country consumes more than it produces, it must import the difference from the rest of the world.

Yesterday, Trump referred to the relationship between China and the U.S. as "very strong", which may hint that a possible truce to the ongoing trade war between the two countries is not too far away. "Once you move from putting together outlines to filling out the details, that is where things would naturally become more challenging".

China faced a March 2 deadline when the US would have increased punitive duties on $200 billion worth of Chinese imports.

"It is our hope that numerous legitimate trade issues raised by the administration can be addressed in these negotiations and that the tariffs will not be needed".

The past rounds of negotiations were powered by the implementation of the consensus reached by Chinese President Xi Jinping and Trump, who met in December a year ago after the closing of the G20 summit in Argentina. He added, "We still have a little ways to go".

Trump said on February 24 that following the constructive talks with Xi Jinping, China's President, he is delaying the tariff increases (from 10% to 25%) on US$200 billion of Chinese products, which were scheduled to be imposed on March 2.

Though talks appear to be making substantial progress, it's still too soon to tell how the final agreement will look.

The arrest in Canada of Meng Wanzhou, the CFO of Chinese telecommunications giant Huawei and the daughter of the company's founder and president Ren Zhengfei, has been viewed as a nadir in trade relations between China and the West.

The Shanghai Composite index rose 5.6 per cent to an eight-month high.

Progress in the U.S.

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"The tariff postponement simply means that both sides realize that they are nowhere near a viable deal, and to avoid a showdown later this week, they need some breathing room", he said.

Another ruling party newspaper, the Global Times, said the talks "solved most of the problems of both sides" and negotiators were "already preparing the text of an agreement".

The two sides have reached consensus on how to alleviate the trade imbalances, several Chinese government sources said.

"So all the time traders have information flowing to them saying that things are going positively between China and the United States, everyone wants to see a deal come out of this", said Otto, who is also a global market commentator at GTS, a leading electronic market maker across global financial instruments. Another 37 per cent expect relations to stay at their current fraught level.

A potential stumbling block is Chinese resistance to US pressure for an enforcement mechanism with penalties if Beijing fails to carry out its commitments.

Trump approved tariffs on around $200 billion of Chinese imports, including $1 billion in bike products past year, with the initial round of tariffs coming in to effect on Monday 24 September, starting at 10%.

Lu noted that Xi has told Trump that he is willing to keep holding meetings between them.

The financial sector rose 1.35 percent, helped by a 1.50 percent rise in bank stocks, ahead of Fed Chair Jerome Powell speech about monetary policy on Tuesday and Wednesday.

In fact, Trump has become much more dovish on the trade war than his lead negotiator, which, according to Bloomberg, has created cracks in their relationship.

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