Hiking Tariffs ‘Won’t Resolve Any Problem,’ Says Chinese Foreign Affairs Ministry
China confirmed Tuesday that Vice Premier Liu He will lead the delegation that travels to Washington for the 11th round of U.S. trade talks opening Thursday. Trade experts originally speculated Liu’s presence at the talks could augur well for a possible breakthrough to fend off President Donald Trump’s threat to hike Section 301 tariffs to 25 percent on the third tranche of Chinese imports (see 1905060015).
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That was before U.S. Trade Representative Robert Lighthizer told a media briefing Monday that his office soon would publish a Federal Register notice legally setting the tariff increase to take effect 12:01 a.m. Friday. “China believes the premise and basis for a deal are mutual respect, equality and mutual benefit,” said a Foreign Affairs Ministry spokesperson Tuesday. “Raising tariffs won't resolve any problem.”
China considers it “natural to have differences in a negotiation,” said the ministry spokesperson in response to Lighthizer’s allegations Monday that the talks derailed last week in Beijing after China reneged on previously negotiated commitments: “The Chinese side will not sidestep differences and has good faith in continuing consultations.” Asked if he thinks it’s possible Lui’s presence at the talks could persuade the Trump administration to delay or scrap Friday’s tariff increase, the spokesperson said: “I'll leave that to the U.S. side.”
The National Retail Federation expects no product shortages from importers that might divert Chinese inventory now on the water from arriving through U.S. ports of entry at significantly higher tariff rates after Friday morning, emailed spokesperson Bethany Aronhalt Tuesday. “Companies will have to pay higher costs when products arrive to the U.S.,” she said. “There isn’t much mitigation a company can do for products that are already en route to U.S. ports.”
With the List 3 tariffs at 10 percent since they took effect Sept. 24, “some larger companies were able to adopt strategies to lessen the burden on consumers, but small businesses were forced to pass along that cost,” said Aronhalt. “At the 25% level, companies won’t be able to absorb that impact. They’ll eventually be forced to pass along those costs in the form of higher prices. As for small businesses, it will make it even harder for them to compete in a very competitive market.” NRF thinks that “at the macro level, it’s unlikely the price hikes will be immediate,” said Aronhalt. “It’s difficult to pinpoint an exact time as it will depend on the retailer and their inventory.”
The administration needs “to get these negotiations right,” Senate Finance Committee Chairman Chuck Grassley, R-Iowa, told reporters Tuesday. He hailed President Donald Trump for being "the first president to call out China on bad behavior and bring them to the negotiating tables so we have freer trade," he said.
"When all the dust settles over these negotiations or these tariffs, we have to show these were worthwhile negotiations,” said Grassley. “I encourage the Chinese negotiators to bring these negotiations to a successful close so we can avoid prolonged tariffs which we know have an impact on the U.S. economy."