China’s economy is less reliant on exports than it once was, and could boost trade with other countries, experts say.
US President Donald Trump said on Friday trade talks with China would continue even after Washington moved to increase tariffs on Chinese imports, avoiding the worst-case scenario of a complete breakdown in negotiations.
Trump’s remarks, which were made in a tweet, followed the end of talks in Washington between US Trade Representative Robert Lighthizer, US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He.
“Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries,” Trump said, praising his relationship with Chinese President Xi Jinping and saying the negotiations would carry on.
“In the meantime, the US has imposed Tariffs on China, which may or may not be removed depending on what happens with respect to future negotiations!” the US president said.
US stock indexes, which opened sharply lower on Friday, reversed course and were in mostly positive territory in late afternoon trading in New York. Yields on US government debt also drifted higher after the end of the talks.
Earlier on Friday, the US increased its tariffs on $200bn in Chinese goods to 25 percent from 10 percent, rattling financial markets already worried the 10-month trade war between the world’s two largest economies could spiral out of control. China is expected to retaliate.
Trump defended the tariff increase earlier on Friday and said he was in “absolutely no rush” to finalise a deal, adding that the US economy would gain more from the levies than any agreement.
Despite Trump’s insistence that China will absorb the cost of the tariffs, US businesses will pay them and likely pass them on to consumers. Consumer spending accounts for more than two-thirds of US economic activity.
It may take three or four months for American shoppers to feel the pinch, but retailers will have little choice but to raise prices to cover the rising cost of imports before too long, economists and industry consultants say.
Trump, who has adopted protectionist policies as part of his “America First” agenda and railed against China for trade practices he labels unfair, has accused Beijing of reneging on commitments it made during months of negotiations.
Following the US tariff increase, China’s Commerce Ministry said it would take countermeasures but did not elaborate.
China responded to Trump’s tariffs last year with levies on a range of goods including soybeans and pork.