US tariff hikes show its ‘frustration at being unable to browbeat China’

The US plans a hefty increase in tariffs on Chinese products, to come into effect on Friday. Experts say that this is a sign of Trump’s frustration over a stalemate in trade negotiations, as real reform of China’s trade practices remains elusive.

TheUSwill increase tariffs on 200 billion dollars’ (179 billion euros) worth ofChinesegoods to 25 percent on Friday, the White House confirmed on Monday. This announcement comes as a team of Chinese negotiators are set to fly to Washington for talks on Thursday and Friday, in an attempt to resolve more than a year of disputes overtrade.

“We’re moving backwards instead of forwards, and in the president’s view that’s not acceptable,” US PresidentDonald Trump’s most senior trade adviser, Robert Lighthizer, told journalists on Monday. “Over the last week or so, we have seen an erosion in commitments by China.”

Trump’s ragingtweetannouncing the tariffs on Sunday caught some American observers bysurprise, seeing as the US and China had both recently expressed optimism about reaching an agreement soon.

As for Beijing, it is likely to have seen Trump’s Twitter missive as “both provocative and insulting”, financial analyst Chris Krueger toldBloomberg.

‘Very hard to see how they’ll get out of this impasse’

“These negotiations are at an impasse, and it’s very hard to see how the two parties will get out of it,” Jean-François Dufour, a specialist on the Chinese economy and director of the French consultancy DCA Chine-Analyse. For months Washington and Beijing were content to engage in tit-for-tat escalations on trade, but they now find themselves “having to discuss the issues at the heart of the matter, and they can see how difficult it is to reconcile their mutual points of view”, Dufour continued.

Beijing is calling for an immediate end to American retaliatory measures on trade – which havedentedChina’s economic growth – and it believes it has already made enough concessions to the US. Notably, China has agreed to import more American products over the next six years, and introduced a law in 2018 to stop mandatory technology transfers for foreign companies investing in the country. This practice of forcing businesses to hand over their secrets has helped China to catch up technologically with the West – but it has been strongly criticised by many of the country’s trading partners, in particular the US.

But Washington fears that these concessions are just empty promises that won’t come into fruition. “The Trump administration understands that the big problem with China is not the law itself, it’s the lack of rule of law,” Dufour said. “The courts are controlled by the Communist Party, so the law is only actually applied with the party’s say-so,” he explained.

‘It doesn’t take much for Beijing to make promises’

Consequently, the US has called for an independent body or mechanism to be set up to ensure that any agreements the two countries make are implemented. However, China couldn’t accept that, “because it wouldn’t allow the government any way to intervene in the application of the rules”, according to Dufour.

Trump’s tweet and its promise of increased tariffs “reflect its frustration at being unable to browbeat Beijing, to bend China to its will”, Dufour continued. The US presidentbelievesthat the current strength of the American economy will allow him to ratchet up the trade war, because it means that China has much more to lose than his country.

If Trump is satisfied with Chinese pledges to import more American goods, which could allow him to “run in 2020 as the candidate who has won concessions from the Chinese, this strategy can work, because it doesn’t take much for China to make promises”, Dufour said. However, if the US president wants Beijing to carry out the real reforms that Washington wants, he has “little chance of succeeding”.

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