The talks concluded on Sunday without any new agreements and the possibility of the two economic giants placing trade restrictions on each other remains open.

By Daniel Herborn

Posted on June 4, 2018

The Chinese government distributed a statement warning their US counterparts that they were prepared to walk away from previous trade and business agreements the two countries have in place if the US implements new tariffs and trade restrictions.

Last week, officials from the Office of the United States Trade Representative (USTR) had asserted that the country may impose a 25 per cent tariff on Chinese high-tech goods. Chinese officials said they may retaliate with similar measures if the tariff went ahead.

Chinese Vice Premier Liu He and US Commerce Secretary Wilbur Ross led their respective delegations at the Beijing talks. Top officials from the USTR were notable in their absence.

Ross said the meeting had been “friendly and frank”, but there was no end to the stalemate. The two parties did not release any joint statement from the talks.

The goods affected by the potential tariff on high-tech industries are worth up to US$150 billion.

Last month, trade and economic representatives from the two countries met in Washington. In that round of talks, China agreed to significantly increase the amount of US goods and services it purchases, particularly around agricultural products and energy.

Now, that apparent progress may be reversed if the US does not back away from its proposed high-tech tariff.

Trump on the threat of a trade war

US President Donald Trump struck a defiant tone on Twitter in relation to the trade talks.

“When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War!,” he wrote.

“The U.S has been ripped off by other countries for years on Trade, time to get smart!”

Trump has also recently imposed tariffs on steel and aluminium as he attempts to redress the country’s ailing trade balance.

Last year, China’s trade surplus with the US reached a new high of US$375.2 billion.

As the two largest economies in the world, any trade war between the pair could have major economic implications across the globe.

A statement by the Chinese government, distributed by the official state-controlled Xinhua News Agency, preached caution.

“The achievements reached by China and the United States should be based on the premise that the two sides should meet each other halfway and not fight a trade war,” it said.

“To implement the consensus reached in Washington, the two sides have had good communication in various areas such as agriculture and energy, and have made positive and concrete progress while relevant details are yet to be confirmed by both sides.”

An op-ed in state-run Global Times said there were major economic implications to the lack of agreement.

“The on-again, off-again trade disputes have had a significant impact on both countries as well as the global market,” it read.

“We have experienced intensifying trade rows, the US playing around with punitive tariffs and China striking powerful counterblows.”

‘Still a lot of uncertainty’

The Economist analyst Nick Marro said: “It seems like negotiations ended in another stalemate, without either side really conceding anything.

“There’s still a lot of uncertainty. The statement from Xinhua makes it seem, however, that tariffs are still very much on the table.”

A sticking point between the two countries may be China’s commitment to ‘Made in China 2025’. This program directs billions of dollars into initiatives aimed at making China the world leader in high-tech industries such as electric cars.

Analysts say China is unlikely to make any concessions which would hamper this program.