By Joyce Yu
Philadelphia, PA–There are signs that the tit-for-tat trade tariffs between China and the United States may ease. First of all on Wednesday, China’s ambassador to Washington Cui Tiankai held talks with John Sullivan, acting US secretary of state about the simmering trade tension, sending a signal that both governments still hope to prevent a full-blown trade war. This is followed by remarks by Larry Kudlow, President Donald Trump’s recently appointed chief economic adviser. He told Fox Business: “These are just the first proposals [for tariffs] . . . I doubt if there’ll be any concrete actions for several months.”
These moves helped stabilize the stock market. Having fallen sharply early on Wednesday morning, US shares recovered all their loss in the afternoon with the Dow and the S&P 500 index both finishing with 1% gains. All three US indexes extended their rallies on Thursday and the European stocks opened firmly higher as well with London, Paris and Frankfurt all adding more than 1.5%. Over in Asia, Japan’s Nikkei and Korea’s Kospi increased 1.5% and 1.2% respectively.
Financial Times quoted a senior US trade official who, however, refused to confirm that any negotiations were under way with China. He said, “It’s just simply an effort to intimidate us or to get us to back down,” the official told reporters. “That’s their decision if they want to do that . . . We believe that the best option would be for them simply to change their behaviour [and to stop stealing US intellectual property].”
Worsening trade relations between the largest global economies prompt concerns from the business community that the overall economic activities will be affected despite a small share of only 1% the US exports of goods and services to China accounting for the nation’s GDP. The largest US exports to China last year were aircraft, soyabeans and cars, all of which face possible tariffs. With the tariff proposals, the US manufacturing and agriculture industries would be squeezed twice – their costs of their raw materials and equipment would be ramped up by tariffs on US imports, while their sales to China would be hit by its retaliatory tariffs on their exports.
Global businesses including American business leaders have expressed hopes for the both sides to avoid dispute. John Heisdorffer, President of the American Soybean Association, warned that the Chinese tariff would “have a devastating effect on every soyabean farmer in America”. He urged Mr Trump to “engage the Chinese in a constructive manner, not a punitive one”. While acknowledging that China’s theft of intellectual property and unfair trade practices threatened US competitiveness, President of the National Association of Manufacturers Jay Timmons reiterated that tariffs would “create new challenges” in the form of higher costs and retaliation. He has written to Mr Trump urging him to pursue a bilateral trade agreement with China “that wholly restructures our economic relationship”, according to a Financial Times report.
