U.S., China Enter Day Two of Trade Talks as New Tariffs Kick In

(Bloomberg) -- Senior U.S. and Chinese officials embarked on a second day of trade talks Thursday with expectations low of any meaningful progress as Beijing and Washington traded their latest round of tit-for-tat tariffs.

The world’s two largest economies on Thursday each imposed tariffs on imports worth some $16 billion, taking the total value of goods hit as a result of President Donald Trump’s trade war with China to $100 billion.

Expectations are low for any meaningful progress in the talks led by U.S. Treasury Undersecretary for International Affairs David Malpass and Vice Commerce Minister Wang Shouwen.

The Trump administration insists it’s engaging with China and will keep raising its concerns, but a senior administration official who spoke with reporters on Thursday played down the possibility of any major announcement coming out of the meetings.

The Chinese delegation has shown no signs of bringing any significant compromises to the table this week and continues to believe that offering increased purchases of American commodities aimed at reducing the U.S. trade deficit with China is the best tactic, said a person familiar with the discussions.

The Chinese don’t seem to have evolved at all in their position, the person said.

Hard Line

Analysts point out that the Trump administration is also showing no signs of softening in its hard line toward Beijing.

Trump on Thursday highlighted new tougher restrictions aimed at Chinese investment in the U.S. at a White House event. Moreover, this week he rekindled his campaign accusations that Beijing is engaging in currency manipulation, long one of the most sensitive friction points between the two countries.

His trade team is also proceeding with additional efforts to raise pressure on Beijing.

U.S. officials are due to meet in Washington on Friday with delegations from the European Union and Japan to discuss joint efforts to confront China at the World Trade Organization over its industrial subsidies and the conduct of its state-owned enterprises.

Administration Hawks

More provocatively, hawks in the administration including Robert Lighthizer, the U.S. trade representative, are moving forward with plans to impose tariffs on a further $200 billion in imports from China. Those will take effect as soon as next month and would mean roughly half of all U.S. imports from China would be covered by new levies.

In hearings this week in Washington, U.S. companies and industry lobbyist have been offering their mostly negative feedback on the proposed additional duties of as much as 25 percent on more than 6,000 product lines.

The goods to be covered in the next round of tariffs range from chemicals, raw materials and seafood to vacuums, bicycles and furniture. The U.S. could impose the duties after a comment period ends Sept. 6.

While some of the almost 350 officials testifying are asking for tariffs to be added to grills, air conditioners and other products being imported duty-free -- especially firms hit by increased costs from Trump’s separate tariffs on steel and aluminum imports -- most are asking for products to be removed from the list.

Political Game

“This is a political game being played with my company as the game piece,” Ross Bishop, president of BrightLine Bags Inc., testified on Monday. The California-based company makes nylon gear bags for pilots and other customers, and Bishop pleaded with the trade panel to “help me keep my company alive.”

The interests of U.S. businesses in a deal will vary based on their circumstances and how they’ve been affected by China’s trade practices, said Ron Sorini, a trade lobbyist and former chief textile negotiator at the office of the U.S. trade representative.

The Chinese are miscalculating if they think Trump will respond as previous presidents have and doesn’t really want concrete changes in response to allegations of intellectual property theft and a trade deficit, Sorini said.

Ending the tariffs must be a starting point because of the damage they are doing to U.S. companies, which will make it more difficult to negotiate with China, said Ed Brzytwa, director of international trade for the American Chemistry Council.

Chemicals are getting hard especially hit, with the duties taking effect Thursday affecting $2.2 billion in chemicals and plastics, and the next round of proposed duties affecting $16.4 billion, according to the council. More than 1,000 chemical and plastics products or product groups are hit by the retaliatory tariffs, the group said.

“If these negotiations are going to be successful, they can’t be done under the threat of tariffs or the actual tariff implementation,” Brzytwa said.

©2018 Bloomberg L.P.