Trade talks between the US and China will continue this Wednesday in Washington. But how far are the two counterparties from an agreement? From the US come contradictory signals.

It’s a sea of ​​emotions – and has been for months now: sometimes an open trade war between the US and China seems unavoidable, then again optimistic signals are sent out, often in the form of a tweet by Donal Trump. The US president was still satisfied with the state of talks so far last week: “I like what we’re doing right now.” He was convinced that China would like to come to an agreement, he let the world know.

Quite differently sounds US Secretary of Commerce Wilbur Ross, who does not expect a quick settlement in the trade dispute with China . A solution was still “miles away”, Ross had entered the euphoria brake just a few days ago. Then, in a more conciliatory tone, that there is a good chance that an agreement could be reached in the negotiations with the approximately 30-strong Chinese delegation.

Talks from Wednesday

The Chinese, led by China Vice Premier Liu He, will meet US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on January 30 and 31. For Thursday, a meeting with Trump is planned.

However, the fact that the US judiciary has brought charges against the Chinese technology group Huawei and its finance director Meng Wanzhou shortly before the start of the negotiations leaves hope for an agreement to disappear.

No deal in sight yet

Donald Trump’s external advisor, Michael Pillsbury, had previously ruled out the   possibility of reaching a final solution in these talks . The China expert is considered a hawk when it comes to US policy towards the Middle Kingdom. The Director of the Center for Chinese Strategy at the conservative Hudson Institute says the US capital is very close to the president.

China's Deputy Prime Minister He meets US Secretary of Commerce Ross

Chinese Vice Premier Liu He (right) in June last year with US Secretary of Commerce Wilbur Ross

Time is running out because the peace agreed on the margins of the G20 meeting in Buenos Aires on December 1 in Buenos Aires by US President Donald Trump and Chinese President Xi Jinping is only valid until March. If there is no agreement on a trade agreement until then, Donald Trump wants to extend the US punitive tariffs to almost all Chinese imports worth about $ 500 billion.

US trade deficit at record high

US President Donald Trump has always been bothered by the huge US trade deficit with China. He accuses the Beijing leadership of unfair trade practices, undue subsidies by Chinese companies, and theft of intellectual property. Meanwhile, China’s trade surplus with the US surged 17 percent to $ 323 billion last year (285 billion), according to Reuters Value since 2006.

Despite some drastic punitive tariffs on Chinese goods, Chinese exports to the USA increased by 11.3 percent in 2018 compared to the previous year, while imports from the US into China grew only modestly by 0.7 percent in the same period.

From the washing machine to the electric car

The first punitive tariffs were imposed by the US in January 2018 on Chinese washing machines and solar modules. This was followed in March by import duties of 25 percent on steel and 10 percent on aluminum. With 25 percent more punitive tariffs, on June 15, 2018, the US paid more than a thousand merchandise, mostly technology products, to compensate for the damage caused to the US economy by China’s intellectual property infringement and forced technology transfer.

These tariffs are aimed primarily at product groups of the Chinese initiative “Made in China 2025”, including aircraft construction, robotics and mechanical engineering, vehicles such as electric and hybrid cars and information and communication technologies.

China slipped back one day later and also took US $ 50 billion worth of US goods, including agricultural products, automobiles, and food products such as soybeans, seafood, or meat.

In September, the US relented against China and raised the volume of punitive goods to a total of some $ 250 billion, or about half of all Chinese imports to the United States.

These new tariffs of ten percent should be increased from January 2019 actually to 25 percent. The “truce” agreed in Buenos Aires has hitherto prevented this.

Escalation and relaxation

Trump has repeatedly threatened to impose further punitive tariffs on goods valued at more than $ 267 billion. If other countries do not do fair trade, they have to pay customs duties, Trump tweeted in September 2018. Then China’s total imports to the US would be affected.

Recently, there had been relaxation signals: As of January 1, 2019, China lowered the import duty on US cars and vehicle parts again from 40 to 15 percent. However, according to the Beijing Ministry of Commerce, the scheme is only for three months. China also resumed US imports of soya in December, with shipments expected to arrive in Chinese ports during the first quarter of 2019.

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