GP Insights

GP Insights # 183, 11 November 2019

US-China Tariff Rollback: Yes, sorry no…  
Harini Madhusudan

What happened?
Early this week, news reports indicated an interim deal between the US and China on a tariff rollback. The Chinese commerce ministry said the two are reaching an agreement to cancel tariffs in phases. However, by the end of the week, Trump denied these efforts and said: "They'd like to have a rollback... not a complete rollback because they know I won't do it." 
 
Negotiations have dragged on for months now. Last month, Trump announced that the two sides had reached a consensus for a limited "phase one" agreement that could be signed within weeks.
 
What is the background?
The trade dispute between the US and China enters the 16th month. Negotiations have failed to reach an understanding. The US imposed the latest set of trade restrictions in October 2019, placing 28 Chinese companies on its “entity list”; this bans US firms from selling to China. The US claimed that the new restrictions were over China’s human rights abuses against the Uighur Muslims in Xinjiang. China denounced this move as interference on its sovereignty. 
 
What does it mean?
Failure of these talks by 15 December, could result in imposing tariffs on over $500 billion worth of Chinese imports to the US.  Counter-tariffs would likely be applied to nearly all US goods imported into China as well.

Differences remain under two layers. First is the difference within the US, between Donald Trump and his policy negotiators. Second, are in the statements made by the US and the Chinese sides. Every time China makes a public statement, Trump negates it or offer a different perspective. 
  

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