On Sunday, China and the United States ended the trade talks that took place in Beijing. The number of announced deals is zero, and Beijing officials refused to commit to buying more American goods. The US will continue with imposing further tariffs on Chinese export goods.
Chinese news media distributed the official statement that said: “If the United States introduces trade measures, including an increase of tariffs, all the economic and trade outcomes negotiated by the two parties will not take effect.”
Now, the Trump administration has China’s industrial policies to worry about. Furthermore, the problem with the Chinese telecommunications company ZTE remains unresolved, which harms both countries. The American export promotion team was led by Commerce Secretary Wilbur Ross and he was joined by senior officials from the Treasury and the Agriculture Department. The United States Trade Representative Office has threatened to impose 25 percent tariffs on $50 billion a year in Chinese goods, while the aluminum tariffs that are already imposed will remain in power. Interestingly enough, the top officials from this office were not present.
Meanwhile, Trump wrote on Twitter: “When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War!” However, Beijing officials would not pledge additional purchases and they demand Americans to solve their border trade issues. China is ready to strike back if the US imposes the tariffs. In that case, Beijing would block an equal value of soybeans and other goods that come from the United States.
When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War! The U.S. has been ripped off by other countries for years on Trade, time to get smart!
— Donald J. Trump (@realDonaldTrump) June 2, 2018
The dispute is obviously the main issue, but the Chinese officials are concerned about ZTE, a telecommunications giant which employs 70,000 people. The company was forced to shut down its operations almost completely because the American government agency, the Bureau of Industry and Security ordered the US companies to stop selling software and microchips to ZTE.
Around three weeks ago, Trump wrote a tweet in which he expressed concern about the American sanctions on ZTE. When Mr. Ross and his team arrived in the Beijing, China has become optimistic that they could finally solve the issue without any major obstacles and sacrifices.
“Chinese officials know these talks are precarious, but may underestimate the domestic political cost Trump now sees in lifting the ZTE ban without major concessions from China,” said Andrew Gilholm, the director of China analysis at Control Risks, a political and security consulting firm. “If the ban stays, Beijing’s retaliation will definitely go up a gear.”
Meanwhile, the state media in China explained why the sales ban is imposed on ZTE. The company has ties to Iran and North Korea. Such connections do not cast the best light on the country because Beijing claimed that China’s enforcement of international sanctions against North Korea was one of the reasons the upcoming summit between Donald Trump and Kim Jong-Un was organized.
According to the Chinese news outlets, the ZTE decision was made by Mr. Ross’ Commerce Department. They suggested that the decision is nothing more than a bargaining ploy, which is a part of trade negotiations. The Bureau of Industry and Security is a part of the Commerce Department, but despite that, its autonomy is considerable. The agents of the bureau carry guns and badges, and they have played a huge role in preventing Iran and Iraq from fully developing the nuclear weapon.
James Zimmerman, a former chairman of the American Chamber of Commerce in China and current partner in the Beijing office of the law firm Perkins Coie says: “Trump’s strategy does no favors for the moderates like trade negotiator Liu He who are eager to take China down a more manageable path of market and financial reforms, and such reforms would indeed be good for U.S. commercial interests.”