February 25, 2019

Real Progress In U.S.-China Trade Talks?

Top trade and economic officials from the United States and China continued talks last week, and reportedly continued to make progress. So much progress that on Sunday, President Donald Trump announced that he will delay his plan to raise tariffs on $200 billion worth of Chinese goods. (Those new penalties were to take effect March 1.) The president announced his decision on Twitter and also said, “Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”

Politico had reported last Friday that the discussions could result in six separate memorandums of understanding (MOUs): agriculture, services, non-tariff barriers, currency, intellectual property rights and forced technology transfers, and cybersecurity.

President Donald Trump said Friday negotiators had reached a deal on currency already. While the president didn’t offer any details, according to a separate, unconfirmed report in Politico, Chinese officials have agreed not to depreciate its currency beyond 7 renminbi to the dollar. (Earlier in the week, Federal Reserve Chair Janet Yellen seemed to have skepticism about a potential currency deal. In a podcast with the Brookings Institution, a Washington, D.C.-based think tank, Yellen said, “It’s really difficult and treacherous to define” when a country is gaming its currency to gain trade advantages. It’s also important to note that the United States and China have not agreed to the mechanisms that would be used to enforce the agreements.)

Before last week’s talks concluded, President Trump also met with China’s top negotiator, Vice Premier Liu He. After the meeting, according to CNN, President Trump said, “[T]here’s a very good chance the deal will happen” and noted he plans to meet with Chinese President Xi Jinping regarding an agreement “fairly soon.”

At the same time the two countries were negotiating a broad trade deal, the U.S. Commerce Department announced that it would allow a countervailing duty investigation into imports of certain steel wheels of 12-16.5 inches in diameter from China to move ahead. The department also assigned preliminary subsidy rates of 58.3 percent to 293.27 percent on these imports, which were worth about $74 million in 2017. The Commerce Department is expected to finalize the rates on or before July 1, 2019. Click here to read the department’s full announcement.