USA And China To Resume Trade Talks
An outcome of the recent G20 summit in Osaka, Japan was that the US and Chinese presidents, Donald Trump and Xi Jinping, have agreed that trade talks between the two nations aimed at resolving their trade war will reconvene. The move was welcomed around the world, but it is still a long way from resolving a dispute that has already threatened the pace of world growth through direct and indirect consequences.
President Trump announced that he would permit US firms to sell components to the Chinese company Huawei. The firm has been the subject of particular contention since the USA alleges that some of its technological products could allow China to spy on the users – something the company is at pains to deny. This reason is why the further involvement of Huawei in projects that could involve infrastructure for Western intelligence agencies is so contentious. US firms were banned from selling technology to Huawei last month under a US Commerce Department directive.
Trump has also confirmed that he will not be imposing tariffs on a further $300 billion worth of Chinese exports to the USA, for the time being, at least. The phrase “for the time being” was how Trump described the resumption of the talks, a form of words that does not auger particularly well for their prospects of success.
Tariffs are really a blunt weapon when dealing with a trade dispute since it is the (US) consumer that must pay the higher charges to buy the goods to which they are applied. The idea is that consumers will select alternative sources for the goods they wish to purchase, but it is not always possible to do so, or a specific product (from China) may be what they want. It has been estimated that if Trump had pressed ahead with further tariffs on Chinese goods, the cost to the US consumer would have been an additional $12 billion. It will have escaped nobody’s notice that the US is gearing up for a presidential election next year.