U.S. tariff levels on China apparently will depend on how far China is willing to go in agreeing to Trump administration requests for trade enforcement and other priorities.
It seems that U.S. tariffs on China will be adjusted based on the extent to which China meets Trump administration requests regarding a bilateral trade enforcement mechanism and agrees to other U.S. priorities, a source familiar with U.S.-China talks said.
“On the tariff issue, it seems to me it’s wrapped up in the enforcement mechanism, and … other priority issues in these talks,” said the business organization source. “So, I would assume there’s some calibration that will be done on tariffs vis-a-vis how far China goes regarding U.S. asks on enforcement, as well as asks in other priority areas.”
Enforcement has been a hot topic of U.S.-China talks as both sides look to close in on a final deal regarding bilateral trade and investment between the two countries by late April.
U.S. Trade Representative Robert Lighthizer told the House Ways and Means Committee last month that a hopeful enforcement mechanism would involve monthly meetings at the office director level, quarterly meetings at the vice ministerial level and semi-annual meetings at the ministerial level, which would all review companies’ complaints.
If conflicts rising to the ministerial level can’t be resolved, the U.S. would “expect to act proportionately but unilaterally,” Lighthizer said.
Concluding a final deal by the end of March “has faded as an option,” but hasn’t been totally ruled out, said the industry source, who spoke on background to reporters on Friday.
Bloomberg originally reported on Thursday that a meeting between President Donald Trump and Chinese President Xi Jinping to finalize a deal is most likely to happen next month at the earliest.
The Trump administration hopes the countries are in the “final weeks” of talks, Lighthizer said during a Senate Finance Committee hearing Tuesday.
The source’s organization is optimistic the U.S. and China can reach a deal, as the countries are showing a “will” to reach an agreement, the source said.
Shortly after Trump announced a first batch of Section 301 tariffs on China in March 2018, Chinese and U.S. officials have been engaging on a regular basis to resolve U.S. tariffs and Chinese retaliatory tariffs. The U.S. has cited concerns on several structural economic issues in China, including practices regarding intellectual property and forced technology transfer.
Washington and Beijing are clearly far along in several discussion areas, the source said.
“They’re working, it would appear, day and night, including, based on the readouts that we’ve seen of some of these calls, where Ambassador Lighthizer and [Chinese] Vice Premier Liu He are going through the text,” the source said.
The organization has seen readouts indicating the leaders engaging on a provision-by-provision basis, the source said.
Lighthizer is working to build benchmarks and verification mechanisms into any agreement, the source said.
In addition to work being done on IP, forced tech transfer and currency, there’s a potential the final deal’s non-tariff barriers segment could cover issues including customs, subsidies and export-restricting measures, the source said.
“If the playing field is level, if the customs process is fair, if the standards process is fair and non-discriminatory, we have great confidence that U.S. companies can be very successful exporters, including to China,” the source said.
The Office of the U.S. Trade Representative didn’t comment on the status of talks.