Unlike a number of nations that have responded to Trump’s “reciprocal tariffs” by seeking deals with Washington, Beijing has been upping its own levies on US goods in response and has not sought talks. The Chinese commerce ministry has criticised the tariffs as irrational and said Beijing will ignore the “meaningless” tariff numbers game. It has also warned that China will “fight to the end” if the US insists on heaping substantial damage on China’s rights and interests.
Also Read: Trump hints at ending tit-for-tat China tariffs that rattled marketsFor weeks, the US and China have remained in a deadlock over talks for a trade deal, but now signs have emerged that Trump is willing to talk, and so is China.
Trump’s reconciliatory statements
Trump on Thursday signaled a potential end to the tit-for-tat tariff hikes between the US and China. “I don’t want them to go higher because at a certain point you make it where people don’t buy,” Trump told reporters about tariffs at the White House. “So, I may not want to go higher or I may not want to even go up to that level. I may want to go to less because you know you want people to buy and, at a certain point, people aren’t gonna buy.”
Trump said China had been in touch since the imposition of tariffs and expressed optimism that they could reach a deal. Speaking with reporters, Trump repeatedly declined to specify the nature of talks between the countries or whether they directly included Chinese President Xi Jinping.
However, sources told Reuters that free-flowing, high-level exchanges of the sorts that would lead to a deal have largely been absent.
Yet, Trump appears to be softening his stance on China. “Oh we’re going to make a deal,” Trump said from the White House in response to a reporter’s question about picking up the phone to call China’s President Xi Jinping. “I think we are going to make a very good deal with China.”
China shows willingness to talk
China’s commerce ministry on Thursday urged the US to stop putting “extreme pressure” on the world’s second-largest economy and demanded respect in any trade talks. The two sides have remained at an impasse over who should start those talks.
China also said on Thursday it is in “working-level communication” with the US on the deadlock over their high-intensity tariff war but asserted that the person who “tied the bell” should untie it. Trump had said, “The ball is in China’s court, and China needs to make a deal with us.” In response, the Chinese spokesperson quoted a proverb, saying, “The person who tied the bell must be the one who unties it.”
Also Read: China open to negotiations with the US in economic & trade areas
In an indication that trade talks might begin soon between US and Chinese officials, China appointed as its new trade negotiator on Wednesday a former representative to the World Trade Organization who replaces Vice Commerce Minister Wang Shouwen, a veteran commerce official and top trade negotiator since 2022.
Perhaps more so than his predecessor Wang, Li’s experience at the Commerce Ministry and his participation in negotiating China’s accession to the WTO more than 20 years ago stand him in good stead as China refuses to cave in to US demands, Tu Xinquan, director of the China Institute for WTO Studies at the University of International Business and Economics, told AP.
Still, higher-ranking leaders from President Xi Jinping on down are likely to chart the course, with Li representing their case in any talks with the US, Tu said. “There might be another style of negotiations. Li Chenggang is an open-minded person and supports free trade,” Tu added.
China could be softening its stance too because its economy is in no shape to withstand a tariff war with the US. China is facing persistent deflation, driven by a prolonged property crisis and weakened domestic demand. This has reduced consumer prices and business profits, which in turn has eroded workers’ earnings and job security. A significant portion of China’s economic growth relies on exports, particularly to the US. The imposition of high tariffs by the US has severely impacted China’s export potential, adding further pressure to the economy. Domestic consumption in China remains low, accounting for only about 39% of GDP. Attempts by the government to stimulate spending through subsidies and promotional campaigns have had limited success.
Economists warn that the ongoing deflation and trade war could lead to deeper economic shocks. The anticipated drop in exports may result in massive job losses, further accelerating the shift to precarious gig work and deepening economic inequality.
(With inputs from agencies)
