Reuters has done a useful explainer on the trade negotiations. The two sides are trying to resolve deep differences over China’s trade and intellectual property practices, industrial subsidies and market access – to avert an increase in US tariffs on Chinese goods scheduled for 2 March.
What are Washington and Beijing fighting about? After years of steadily rising US trade deficits with China and US complaints that Beijing has systematically obtained American intellectual property and trade secrets through coercion and outright theft, the Trump administration last year demanded fundamental changes to China’s economic model to allow US companies to compete on a more level playing field. These include an end to policies that Washington claims effectively force US firms to transfer their technologies to Chinese partners and full protection for American intellectual property rights.
What’s at stake in these talks? At the most basic level, a dominant position in future high-technology industries, according to the US Trade Representative’s office. China is determined to upgrade its industrial base in 10 strategic sectors by 2025, including aerospace, robotics, semiconductors, artificial intelligence and new-energy vehicles. US officials say they don’t have a problem with China moving up the technology ladder, but they don’t want it to happen with stolen or unfairly obtained American know-how. They argue that China’s massive support for state-owned enterprises is leading to overproduction, making it hard for U.S. companies to compete on a market-driven basis.
How does Beijing view these complaints? Chinese officials generally view the US actions as a broad effort to thwart China’s inevitable rise to a dominant position in the global economy. They deny that China requires or coerces technology transfers, saying that any such actions are commercial transactions between American and Chinese firms. At the same time, China is looking to make a deal with Trump to ease US tariffs on Chinese goods and to directly reduce the trade imbalance between the world’s two largest economies through increased purchases of US goods, including soybeans and energy. Beijing has also taken some steps to open up to more imports, including lowering tariffs on imported cars and allowing foreign companies in some sectors to own a majority of their operations in China.
What actions has the US taken? Donald Trump has imposed punitive tariffs on $250bn worth of imported goods from China so far – a 25% duty on $50bn worth of machinery, semiconductors and other technology-related products, and 10% tariffs on a broader, $200bn range of goods that includes many chemicals, building materials, furniture and some consumer electronics. Thus far, Trump has spared many consumer goods including cell phones, computers, clothing and footwear from tariffs. But if no deal is reached by 2 March, Trump has threatened to impose new tariffs on about $267bn worth of goods, effectively the remainder of imports from China.
Has China retaliated? Yes. China has imposed tariffs of 25% on $50bn worth of US goods, including soybeans, beef, pork, seafood, whiskey, ethanol and motor vehicles. Beijing also has imposed tariffs of 5% to 10% on another $60bn worth of US goods, including liquefied natural gas, chemicals, frozen vegetables and food ingredients. So far, Beijing has spared imports of U.S. commercial aircraft largely made by Boeing. Since Trump and Chinese President Xi Jinping agreed in December to pursue the current round of talks, China has also suspended tariffs on US made autos and has resumed some purchases of US soybeans.