BEIJING- Top trade negotiators from China and the United States held a phone call yesterday morning, China’s Commerce Ministry said, as the two sides try to hammer out a preliminary “phase one” deal in a trade war that has dragged on for 16 months.
Chinese Vice Premier Liu He spoke with US Trade representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin. They discussed issues related to a phase one deal and agreed to maintain communication on remaining issues on phase one talks, the ministry said.
They also discussed “core issues of concern” and reached “a common understanding on resolving relevant problems,” it said.
Completion of a phase one deal had been expected in November, but trade experts and people close to the White House said last week it could slide into the new year, as Beijing presses for more extensive tariff rollbacks and Washington counters with its own demands.
Washington and Beijing officials, lawmakers and trade experts say a more ambitious “phase two” trade deal looks less likely.
Tuesday’s call took place amid heightened tensions on various fronts between Beijing and Washington, with China saying on Tuesday that it had summoned US Ambassador Terry Branstad on Monday to protest against the passage in the US Congress of the Hong Kong Human Rights and Democracy Act.
China’s foreign ministry said the legislation amounted to interference in a Chinese internal matter.
Commerce Minister Zhong Shan, central bank governor Yi Gang and vice head of state planner Ning Jizhe also participated in the phone call.
Meanwhile, New York Fed Reserve Bank researchers found in a study released on Monday said US companies and consumers are paying the tariff costs, estimated at around $40 billion annually.
When the Trump administration imposed tariffs on Chinese imports last year, officials insisted China would pay the cost – implying Chinese firms would have to cut their prices to absorb import “taxes” of up to 25 percent when the goods hit US shores.
Instead, the prices Chinese firms charge have barely budged
As a result of the US-China trade war, US Customs and Border Protection adds as much as 25 percent to the import price as Chinese goods enter the country. If Chinese companies were absorbing that cost, they would have to cut their prices as much as 20 percent – a level that would allow US retailers, manufacturers, or wholesalers to keep their own prices and profits stable.
That is not what is happening.
Import data from June 2018 to September 2019 shows Chinese import prices fell only 2 percent, the Fed study found, in line with price declines seen in many other nations as global trade slowed.
“The continued stability of import prices for goods from China means US firms and consumers have to pay the tariff,” the Fed research team wrote.
The researchers did not estimate how those costs were split between lower profits for US companies or higher consumer prices.
The research did find, however, that China is feeling the impact of higher tariffs.
China’s share of US imports of machinery and electrical equipment has fallen by around 2 percentage points since 2017, and its share of US electronics imports has fallen by 6 percentage points.
That market share “has gone largely to Europe and Japan for machinery and to Malaysia, South Korea, Taiwan, and Vietnam for electronics and electrical equipment,” the study found.
The research did not address how much market share may have been gained by US suppliers, or whether other countries are charging higher prices than Chinese firms. – Reuters