As new tariffs hit, US, China seek to avert more economic damage

Heather SCOTT
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US President Donald Trump has been unapologetic about his aggressive, multi-front trade confrontations, despite warnings of harm to American businesses and consumers

Thousands of American and Chinese products became 25 percent more expensive overnight, but talks are underway Thursday to try to avert more economic damage from President Donald Trump's multifront trade confrontations.

As part of Trump's aggressive trade stance, Washington hit China with punitive duties on another $16 billion in goods, triggering a swift tit-for-tat retaliation from Beijing.

Adding to the $34 billion targeted in July, that brings the total two-way trade weighed down by the steep tariffs to $100 billion, and the United States currently is considering hitting another $200 billion.

And that is on top of US tariffs on Chinese appliances and solar panels, as well as steel and aluminum from around the world -- a total of 10,000 products.

Trump has been unapologetic, insisting that his tough tactics will work, even as American businesses and the Federal Reserve warn of the harm already felt in the economy.

Meanwhile, negotiators are continuing talks in Washington with Chinese and Mexican trade officials to try to find a solution.

- Signs of progress? -

US Treasury's David Malpass, undersecretary for international affairs, is leading two days of talks with China's Vice Commerce Minister Wang Shouwen and Vice Finance Minister Liao Min that began Wednesday.

Treasury has not specified what topics are being discussed.

In Beijing, China's foreign ministry declined to provide details on the progress of the negotiations.

"We hope the US can make concerted efforts with China and follow a rational and practical attitude to earnestly seek good results," foreign ministry spokesman Lu Kang said at a regular news briefing.

While the talks, the first since June, have cheered Wall Street and fueled optimism the countries can step back from the escalating trade war, observers note that real progress is unlikely until high ranking officials get involved.

"I think the fact that they would send lower level folks suggests that they're not talking about the big things," former Commerce Secretary Carlos Gutierrez said Thursday on CNBC.

Trump himself said earlier this week that he was not expecting much from the dialogue.

"We are a country that has been ripped off by anybody and we are not going to be ripped off anymore," he said at a campaign rally in West Virginia on Tuesday.

US businesses have become increasingly concerned about the exchange of tariffs, which are raising prices for manufacturers and hurting US consumers and farmers.

Federal Reserve officials warned "an escalation in international trade disputes was a potentially consequential downside risk" for the economy, including fueling inflation and impeding investment.

China's Commerce Ministry said the country "firmly opposes the tariffs and has no choice but to continue to make the necessary counter-attacks."

US Commerce Secretary Wilbur Ross said China would not be able to continue to retaliate at the same pace as the United States, since "we have many more bullets than they do."

However, Beijing also could target the local operations of US corporations with inspections and boycotts as it has done in past disputes with South Korea and Japan.

- Good news on NAFTA? -

Negotiations on revising the nearly 25-year-old North American Free Trade agreement appear on a more positive track as officials have signaled a partial accord between the United States and Mexico could be reached as soon as Thursday.

That would open the way for Canada to rejoin the talks and finalize a revamped NAFTA deal by the end of the year.

But amid a report the White House was planning to announce a "handshake deal," Mexico's Economy Minister Ildefonso Guajardo told reporters as he arrived for talks on Thursday that it was "better to have a good agreement than a fast agreement."

Guajardo in recent weeks had played up the progress made but also cautioned that the hardest issues were still on the table, including the US demand for a five-year "sunset clause," which would oblige the three countries to renew the pact.

"There's been no indication of flexibility from the US on this issue," a senior Canadian official told AFP.

Canada's absence from the talks in recent weeks also has concerned observers but Gutierrez said he thought the United States also had a strong incentive to reach a rapid agreement before the November congressional elections.

"I don't think President Trump wants (to go into) the midterms with a cloud hanging over NAFTA," Gutierrez said.

"There's a better story in having China be the foil than having a NAFTA cloud hanging over all his constituents."