On Sunday, US President Donald Trump predicted that China would remove its trade barriers. He expressed optimism despite increasing trade tension between the two largest economies of the world that have been seen in global markets in the last week. In recent days, both countries have threatened each other with tariffs worth tens of billions of dollars. Also, Chinese officials have not expressed any interest in negotiations. However, officials of the Trump administration have stressed that tariffs have not been imposed as yet and they could resolve the dispute through talks. Trump echoed the same on Twitter and said China would remove the barriers because it was the right thing.
He said that they would make a deal on intellectual property and taxes would be made reciprocal. He also made a reference to his personal relationship with Xi Jinping, the Chinese president, and said that they would always be friends. Nonetheless, there has been no report of any conversations between Xi and Trump since last week when the trade conflict first erupted. Furthermore, there have been no formal talks scheduled between China and the United States. Tariffs worth $50 billion were unveiled by Washington on Tuesday that were proposed for Chinese imports.
Trump upped the ante on Thursday when he directed US trade officials to create tariffs on more Chinese imports worth $100 billion. He stated that this was due to the unfair retaliation by China against the earlier action taken by the United States. China responded to this statement by saying that they were fully prepared to begin a counter strike if the new threat was implemented by the United States. Gao Feng, the spokesman for China’s Commerce Ministry said that Trump’s threat of another round of tariffs was unjustified and mistaken and there was no possibility of negotiations in the current situation.
There was a decline in the global equity and crude oil markets on Friday as investors are worried about the impact of a tariff war on the world economy. The United States has been sharply criticized by Chinese state media and it has said that their actions of trade protectionism will lead to defeat. Larry Cudlow, the chief economic adviser for Donald Trump and the National Economic Council Director, has repeatedly tried to soothe any worries about a trade war in recent days. He has also stressed that no tariffs have been implemented.
He said that the process may only be benign as China might come around to negotiate, which it hasn’t done so far. China was charged with theft of intellectual property and unfair trade practices by the United States. On Tuesday, the latter proposed $50 billion in taxes, which included almost 25% tariffs on numerous Chinese products ranging from electronic components to flat-panel televisions. Within hours, China responded by coming up with their own list of proposed tariffs on American products worth $50 billion. The products affected by this tariff include aircrafts, soybeans, chemical, beef and cars. While there is a risk of trade war between the two countries, experts don’t really expect one.