Date
18 January 2019
China reported far weaker than expected November exports and imports, showing slower global and domestic demand. Photo: Bloomberg
China reported far weaker than expected November exports and imports, showing slower global and domestic demand. Photo: Bloomberg

US wants trade deal by March 1 or new tariffs will be imposed

US-China trade negotiations need to reach a successful end by March 1 or new tariffs will be imposed, says US Trade Representative Robert Lighthizer.

“As far as I am concerned it is a hard deadline. When I talk to the president of the United States he is not talking about going beyond March,” Reuters quoted Lighthizer as saying on the CBS show Face the Nation, referring to President Donald Trump’s recent decision to delay new tariffs while talks proceed.

“The way this is set up is that at the end of 90 days, these tariffs will be raised,” said Lighthizer, who has been tapped to lead the talks and appeared to tamp down expectations that the negotiation period could be extended.

After a turbulent week in markets, investors “can be reassured that if there is a deal that can be made that will assure the protection of US technology… and get additional market access… the president wants us to do it,” Lighthizer said. “If not we will have tariffs.”

In Argentina last weekend, Trump and Chinese President Xi Jinping agreed to a truce that delayed the planned Jan. 1 US hike of tariffs to 25 percent from 10 percent on US$200 billion of Chinese goods while they negotiate a trade deal.

However, the arrest of a top executive at China’s Huawei Technologies’ has roiled global markets amid fears that it could further inflame the China-US trade row.

In a series of appearances on the Sunday morning talk shows, Lighthizer, economic adviser Larry Kudlow, and trade adviser Peter Navarro insisted the trade talks with China would not be derailed by the arrest, which they deemed solely a law enforcement matter.

US equity markets have staked much on the outcome of the talks. Stocks climbed early in the week on optimism tensions between the two sides were easing, then cratered after Trump claimed he was a “tariff man” after all. He also seemed to indicate the talks could be extended.

But Lighthizer, in his first comments since being appointed to lead the negotiations, said the United States will need concessions across a number of areas in coming weeks if the higher tariffs are to be avoided.

That includes demands for increased purchases of US goods in a more open Chinese market, as well as “structural changes” to a system that, for example, forces American firms to turn over technology to Chinese partners as a condition of doing business.

“We need agricultural sales and we need manufacturing sales. We need structural changes on this fundamental issue of non-economic technology transfer,” Lighthizer said.

The demands are similar to those made under previous Democratic and Republican presidents, but Lighthizer said he felt Trump’s willingness to go beyond “dialogue” and impose tariffs will produce results.

China trade growth slows

On Saturday, China reported far weaker than expected November exports and imports, showing slower global and domestic demand and raising the possibility authorities will take more measures to keep the country’s growth rate from slipping too much.

November exports only rose 5.4 percent from a year earlier, Chinese customs data showed, the weakest performance since a 3 percent contraction in March, and well short of the 10 percent forecast in a Reuters poll.

Analysts say the export data showed that the “front-loading” impact as firms rushed out shipments to beat planned US tariff hikes faded, and that export growth is likely to slow further as demand cools.

The customs data showed that annual growth for exports to all of China’s major partners slowed significantly.

Exports to the US rose 9.8 percent in November from a year earlier, compared with 13.2 percent in October.

Import growth was 3 percent, the slowest since October 2016, and a fraction of the 14.5 percent seen in the poll. Imports of iron ore fell for a second time, reflecting waning restocking demand at steel-mills as profit margins narrow.

“The sluggishness in imports and exports is in full swing,” said Wang Jun, chief economist of Zhongyuan Bank in Beijing.

The soft imports “show a relatively significant pullback in domestic demand”, he added.

China’s November trade surplus with the US was a record US$35.55 billion. The October surplus was US$31.78 billion. But China’s imports from the US in November fell 25 percent from a year earlier, while the annual decline in October was only 1.8 percent.

For trade with all countries, China’s surplus was US$44.74 billion for November, compared with forecasts of US$34 billion and October’s surplus of US$34.02 billion.

On Thursday, the US reported that its global trade deficit in October jumped to a 10-year high, and that the deficit with China surged 7.1 percent to a record US$43.1 billion.

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CG

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