Global markets tumbled yesterday after Donald Trump threatened to raise tariffs on all Chinese imports to 25%, putting crunch trade talks between the world’s two largest economies in doubt.
“The tweets wrongfooted investors who had been growing optimistic that a trade deal was on the cards, and ruptured the calm that had descended over global markets since December’s turmoil,” said the Financial Times.
But the FT says the “aggressive tweets from Trump marked a big shift in rhetoric on the negotiations and raised the possibility that this week’s round could be delayed or cancelled by Beijing”.
Taken by surprise, the Wall Street Journal reported that Beijing was considering cancelling the talks altogether. But while a pared-down delegation is still expected to make the journey, the editor of the influential Chinese state-run Global Times newspaper said the head of China’s negotiating team Vice Premier Liu He Liu was now “very unlikely” to go.
According to the BBC, “in recent days US officials have become frustrated by China seeking to row back on earlier commitments made over a deal”.
Sticking points have included how to enforce a deal, whether and how fast to roll back tariffs already imposed and issues around intellectual property protection.
Tom Orlik, chief economist at Bloomberg Economics, said “it’s possible talks are breaking down, with China offering insufficient concessions, and an increase in tariffs a genuine prospect.”
“More likely, in our view, is that this renewed threat is an attempt to extract a few more minor concessions in the final days of talks” Orlik concluded.
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