US President Donald Trump says Beijing “is talking to” Washington about their trade dispute, claiming his tariffs strategy is working against China and other trade partners.
But Chinese analysts are cautious, saying there could be more tit-for-tat trade measures to come before the two sides get back to the negotiating table.
The South China Morning Post reported last week that officials from Beijing and Washington had held unofficial talks, but a deep and mutual distrust continued to hamper efforts to de-escalate the conflict.
In a series of tweets on Saturday, Trump said the US market was “stronger than ever”, while the Chinese market “has dropped 27 per cent in last 4 months, and they are talking to us”.
It was unclear which measure of Chinese stocks Trump was referring to.
“Tariffs are working far better than anyone ever anticipated” and would make the US “much richer than it is today”, the US president tweeted.
Beyond tariffs: China’s ‘precision strikes’ on US business
Hours later at a rally outside Columbus, Ohio, Trump told an audience of diehard supporters that playing hardball on trade is “my thing”.
“We have really rebuilt China, and it’s time that we rebuild our own country now,” Trump said, adding that the Europeans were “dying to make a deal”.
Since the trade dispute started, Washington and Beijing have imposed 25 per cent tariffs on US$34 billion worth of each other’s imports and more punitive duties are in the pipeline. Washington also threatened to slap 25 per cent tariffs on another US$200 billion worth of Chinese products, which Beijing countered with a list of US$60 billion of imports from the US that may be subject to additional 5 to 25 per cent tariffs.
Official trade negotiations have been stalled since US Commerce Secretary Wilbur Ross visited Beijing in early June. But last week sources told the Post that US Treasury Secretary Steven Mnuchin had called Chinese Vice-Premier Liu He in a bid to persuade Beijing to approve US chip maker Qualcomm’s takeover of Netherlands-based NXP Semiconductors.
Chinese analysts were nevertheless expecting a protracted trade war.
“Both the Chinese stock market and the yuan have been hit in the past few weeks, but this economic conflict has only just begun,” said Shi Yinhong, a government adviser and professor of international relations at Renmin University. “Trump looks likely to follow up his victory in the first round with more attacks.”
According to He Maochun, an international relations professor at Tsinghua University, the US president’s latest tweets defending his use of tariffs were mainly aimed at persuading Americans.
“Trump is facing tremendous political pressure at home … so he needs to challenge some of those interest groups in the US and also overseas. He believes the tariffs strategy will give him more bargaining chips when the two sides get back to the negotiating table,” He said. “Trump is not just a businessman, he’s actually a reform-minded leader … now, the signs are there that the two sides will start talking again, but they will be cautious.”
Forget US-China trade war tariffs, this is what really worries Asia
But Shi said the retaliatory trade measures were not over yet.
“It’s possible both sides will launch fresh countermeasures – not just more tariffs, but also other actions. The point at which both sides can sit down and talk will be reached when they are exhausted and need a break from the trade fight,” he said.
Additional reporting by Bloomberg