China is remaining tight-lipped on the status of trade talks with the United States, despite a looming Sunday deadline for the imposition of new US tariffs.
Ministry of Commerce spokesman Gao Feng said at a press conference in Beijing on Thursday that "the two teams are keeping in close communication", but added he "had no more details" on whether to expect progress in the next few days.
The comments come just three days before a new 15 per cent US tariff on the bulk of China's remaining exports is due to come into effect. China is set to implement retaliatory tariffs on US goods of 5 and 10 per cent if the deadlock is not broken.
Gao confirmed that China is working to apply tariff exemptions for "relevant companies" importing soybeans and pork from the US, a move launched last week that was seen as an effort to placate US President Donald Trump and encourage him to rethink the planned tariff increase.
There has been speculation in both Beijing and Washington this week that these tariffs would not be implemented, but time is running out for the Office of the US Trade Representative to cancel the duty.
Furthermore, both sides have been preoccupied this week with other affairs. In the case of China, its top brass - including President Xi Jinping, Premier Li Keqiang and Vice-Premier Liu He - have been attending the Central Economic Work Conference in Beijing, at which the economic targets for 2020 will be set. US officials, meanwhile, have been tied up with finalising a revamp of its Nafta trade deal with Canada and Mexico.
A draft note is usually posted in the Federal Register, the official record of US government announcements, about five working days ahead of any tariff change. Given the new duty is scheduled for Sunday, there is not time for this protocol, but previous introductions or postponements of tariffs have been announced a day before implementation under the Trump administration.
"This administration has not been fastidious about such procedures. There are Federal Register notices, but they come when they come," said Phil Levy, a trade economist and former senior trade adviser to former US president George W. Bush.
Trump is expected to meet with his top trade advisers on Thursday, after which he will decide on whether to go ahead with the tariff or cancel it, Bloomberg reported.
Reuters, meanwhile, cited an unnamed White House source saying "I'm expecting them to raise the tariffs on Sunday", adding that "the administration is preparing its talking points about how that is the right thing to do. The message is that it will not be painful".
The administration is preparing its talking points about how that is the right thing to do. The message is that it will not be painfulReuters source
Trump is being pulled in different directions by various factions in the White House, some of which are pushing for stronger trade policy against China, and others who wish for de-escalation, a former senior US government trade official said.
The source suspected that Trump may be emboldened by news about China's struggling economy, which could help swing his decision on whether to push ahead with Sunday's tariffs.
"There's supposed to be another call between now and the 15th between lead Chinese and US negotiators," the source added. It is understood that while conference calls have been held between US and Chinese negotiators, they have been at deputy level.
"He (Trump) is obviously not in a good mood because of the impeachment process," said the source, who wished to remain anonymous. "But he has also been buoyed by the strong jobs report and stock markets still close to record highs, and that Democrats finally agreed on the revised Nafta deal.
Trump has the view that the Chinese are in a tougher position (than the US) … because he has folks who are telling them that the Chinese economy is in much worse shape than anyone would like to believeFormer US trade official
"Trump has the view that the Chinese are in a tougher position (than the US). Some of that is just selective hearing on his part because he has folks who are telling them that the Chinese economy is in much worse shape than anyone would like to believe.
"He gets all these reports of companies are shutting down plants in Southern China and moving to Vietnam and elsewhere and that inflation is high due to the pork situation. So I could easily see him put those tariffs on."
The stock markets seem to play a key role in shaping Trump's trade policy, which has led many to speculate that he would not enforce the 15 per cent tariff on around US$156 billion of Chinese goods because it would potentially tank the market before Christmas.
"This would obviously really stoke the markets, but it would take place over the weekend, so that may be less of a consideration," said the source, who spent more than two decades devising and implementing US foreign and trade policy.
Pressure is mounting from business groups in the US to postpone the additional tariffs, which would hit consumer goods that have previously been left out of the 18-month US-China trade war.
A letter to Trump penned by a coalition of 150 associations called Americans for Free Trade, read: "We urge you to reach a phase one deal with China and take the necessary steps to resolve the ongoing trade dispute."
We think it is incredibly important for the ongoing negotiations to be allowed to continue without the spectre of new tariffs taking effect before a deal is signedAmericans for Free Trade
"We think it is incredibly important for the ongoing negotiations to be allowed to continue without the spectre of new tariffs taking effect before a deal is signed," their statement continued.
"As you noted when the Tranche 4B tariffs (set for December 15) were announced, you delayed implementation of those tariffs specifically to avoid harming American consumers over the holidays. This delay should be extended until a deal is reached."
However, more than 260 domestic manufacturers expressed their "sincerest appreciation" for the tariffs in response to China's repeated "violation of intellectual property" in a letter circulated by the Coalition for a Prosperous America.
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