WASHINGTON--Top U.S. and Chinese trade negotiators concluded the first of two days of talks on Thursday to rescue a trade deal that is close to collapsing as Washington prepares to go ahead with plans to hike tariffs on hundreds of billions of dollars of goods imported from China.
Tension between Washington and Beijing has risen after a major setback in negotiations last week when China revised a draft deal and weakened commitments to meet U.S. demands for trade reform. President Donald Trump responded by ordering a tariff hike, and China has said it would retaliate. The 10-month-old trade war has already cost companies in both countries billions of dollars.
Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday and were expected to resume talks on Friday. Officials did not speak to reporters as they left the talks.
In comments to Chinese state media upon arriving in Washington, Liu said that hiking tariffs "is very disadvantageous to both parties".
"We come here this time, under pressure, which shows China's greatest sincerity, and want to sincerely, confidently, and rationally resolve certain disagreements or differences facing China and the United States. I think there is hope," he said.
Before they get back around the table on Friday, the United States will have increased duties on $200 billion of Chinese goods, to 25 percent from 10 percent. The duties apply to cargoes leaving China after 12:01 a.m. EDT Friday.
Consumer products, including cell phones, computers, clothing and toys, are to be especially hard hit. Trump on Thursday took aim at the $325 billion in Chinese goods that are so far untouched by the trade war, saying he was "starting ... paperwork today" to tax those with a punitive tariff of 25 percent.
Trump, who has adopted protectionist policies as part of his "America First" agenda aimed at rebalancing global trade and boosting U.S. manufacturing, accused Beijing of reneging on commitments made during months of negotiations. "We were getting very close to a deal, then they started to renegotiate the deal. We can't have that. We can't have that," Trump said at an event at the White House.
Trump said if the two sides cannot make a deal, the United States would go back to manufacturing products that China now makes. "It'll be the old-fashioned way, the way we used to do it: We made our own product."
U.S. stock indexes closed lower on Thursday ahead of the trade talks, though they pared losses after Trump said he had received a "beautiful" letter from Chinese President Xi Jinping. U.S. oil prices slid and U.S. Treasury yields fell as investors sought safe-haven assets.
Data released Thursday showed the U.S. goods trade deficit with China shrank to its smallest level in five years in March, which could further embolden Trump as he escalates the trade war with Beijing. Plans by Washington to hike tariffs could cut China's growth by 0.3 percentage points but the strengthening economy has become more resilient to external shocks, a Chinese central bank adviser said on Friday.
