World News

Chinese firms voice concerns over length of US trade war truce

Published on: December 4th, 2018

Exporters in China cautioned that the trade war truce between the US and China may provide just a minor respite in hostilities.

The US has agreed to refrain from raising tariffs on $200b of Chinese goods from a current 10% to punitive levels of 25% as planned on 1st January, according to announcements that followed the meeting between US President Donald Trump and Chinese President Xi Jinping in Argentina. China agreed to buy American agricultural, energy and industrial goods.

The catch: the ceasefire is just for 90 days, after which the US could revert to its tariff-raising plan if it sees no progress on structural reform. That timeline could be too tight to make progress on contentious issues such as China’s policies on technology transfers, intellectual property right protections and state-sector subsidies.

The two countries didn’t issue a joint statement with a framework for talks. A statement released by the Chinese government didn’t mention the 90-day time frame.

Since April, the Trump administration has announced three rounds of tariffs on as much as $250b of imports from China. In September, Trump threatened to go all-in with tariffs on the remaining Chinese products “on short notice if I want” – a step that could have meant higher prices on popular imports.

There are some signs already that the two nations may be reading the truce differently. China didn’t announce a commitment to cut tariffs on American cars, a policy Trump disclosed on Twitter. He gave no other details in his post.

The two sides will be fighting again soon, according to Leung Lun, chairman of toy manufacturer Lung Cheong Group, which supplies to Hasbro among others. While toy makers in China such as Lung Cheong haven’t been hit by the US tariffs so far, they are nervous about the fallout should the two nations fail to find common ground in the next three months.

“The result is just to postpone the fundamental questions instead of solving them,” he said. “Trade tensions have just been delayed for three months.”

If you would like to receive our daily newsflash email, click here; you can also follow us on Twitter and Facebook and request a print subscription here.