WASHINGTON (AP) — President Donald Trump extended a trade ceasefire with China for another 90 days on Monday, again delaying a dangerous showdown between at least the world’s two biggest economies.
Trump has signed an executive order on his true social platform for extension, posting that “all other elements of the contract remain the same.”
The previous deadline was set to expire at 12:01am on Tuesday. If that had happened, the US could already ratchet taxes on Chinese imports from a high of 30%, and Beijing could have responded by retaliation on exports to the US.
The suspension has been welcomed by US companies operating with China, as the two countries have bought their time to resolve some of their differences and have cleared the path to a summit between President Trump and Chinese President Xi Jinping later this year.
Shawn Stein, president of the US-China Business Council, said the expansion was “important” to give the two governments time to negotiate trade agreements they hope to improve market access in China and provide the certainty they need to develop medium-term and long-term plans.
“Securing an agreement on fentanyl that leads to a reduction in US tariffs and a rollback of China’s retaliatory measures is needed sharply to resume US agriculture and energy exports,” Stein said.
Reaching an agreement with China remains an unfinished business for Trump. Trump is already overshadowing the global trading system by slap double-digit taxes in almost every country on the planet.
The European Union, Japan and other trading partners agreed to a biased trade agreement with Trump, and once agreed to accept our high tariffs (for example, 15% of Japan and the EU imports) and to drive away the worse.
Trump’s trade policy has transformed the United States from one of the world’s most open economies into a protectionist fortress. According to Yale University’s Budget Institute, the average US tariffs went from about 2.5% at the start of the year to 18.6%, the highest since 1933.
However, China has tested the limitations of US trade policy, built around embracing and using tariffs to beat concessions from trading partners. Beijing is about blocking or slowing access to rare earth minerals and magnets, used in everything from electric vehicles to jet engines.
In June, the two countries reached an agreement to ease tensions. The US said it would revert export restrictions on computer chip technology and ethane, a raw material for petrochemical production. China then agreed to make access to rare earths easier for US companies.
“The US realized it wasn’t the advantage,” said Claire Reade, senior adviser to Arnold & Porter and former US trade representative.
In May, the US and China avoided economic catastrophe by reducing the massive tariffs that slapped each other’s products.
These three-digit tariffs threatened to effectively end trade between the US and China, causing a horrifying sale in financial markets. At a May meeting in Geneva I agreed to retreat Continue talking: US tariffs are still 30%, while China is back at 10%.
They have been talking ever since, demonstrating their ability to hurt each other.
“By overestimating the ability of steep tariffs to induce economic concessions from China, the Trump administration can not only underscore the limitations of unilateral US leverage, but also believe that by threatening territorial exports with Washington, we can believe that we can enjoy indefinitely superiority in subsequent consultations with Washington. For trade, due to the results of previous hub-harmed self-harm.”
It is unclear whether Washington and Beijing will be able to reach an epic bargain surrounding America’s biggest grievances. Among these are protections of China’s intellectual property rights, Beijing’s subsidies and other industrial policies, which have given Americans an unfair advantage in the global market, contributing to a massive US trade deficit with China last year of $262 billion.
Reade does not expect to go beyond a limited agreement, such as purchasing more American soybeans, committing to doing more to stop the flow of chemicals used to make fentanyl and allow for a continuous flow of rare earth magnets.
But the tougher issues likely last long, with “the trade war going forward for years,” said Jeff Moon, a former US diplomat and trade official, who currently runs China Moon Strategy Consultant.
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Associated Press staff writer Josh Balk contributed to the story.
