Posts
US-China
Trade Negotiations Have Collapse
11
July, 2018
High-level
trade negotiations between Beijing and Washington have "ground
to a halt" following Trump's dramatic escalation proposing an
additional $200 billion in tariffs on Chinese
goods, Bloomberg reports.
After
three rounds of formal negotiations led by Commerce Secretary Wilbur
Ross and Treasury Secretary Steven Mnuchin, communications between
senior members of the Trump and Xi administrations have collapsed -
with no immediate plans to restart formal talks.
The diplomatic impasse makes it unlikely the two countries will stand down anytime soon from an intensifying trade war that is roiling financial markets and threatening the broadest global upswing in years. The Trump administration on Tuesday released a proposed list of an additional $200 billion in Chinese goods to be hit with tariffs. China’s Commerce Ministry said the tariffs, which cover everything from refrigerators to handbags, are “totally unacceptable.” -Bloomberg
And
while the two countries have continued to engage in informal dialogue
among lower-level bureaucrats, Washington and Beijing have
around seven weeks to strike a deal or risk a trade war that would be
incredibly disruptive to corporate supply chains - stoking fears over
increased prices for consumers.
“It’s
extremely important that when two governments get into this kind of
situation with each other that even if they are fighting on the
official front, that they have something going on in the background
that enables them at some point to declare a sort of ceasefire,”
National Foreign Trade Council president Rufus Yerxa in a Bloomberg
TV interview on Wednesday. “For
the time being the two sides aren’t going to acknowledge that.
They’re positioning themselves for the end game.”
Despite
the flare-up in tensions amid the $200 billion tariff proposal,
President Trump has continued to emphasize his personal friendship
with President Xi Jinping - while the Trump administration has been
signaling that they would like to re-engage China at the "top
level," according to Bloomberg.
That
said, frustration continues to mount.
there are growing signs of frustration on both sides. On a conference call with reporters Tuesday, senior Trump administration officials argued that China started the conflict with unfair trading practices and abuse of U.S. intellectual property. One of the officials said the U.S. has repeatedly made its concerns clear and continues to hope for a negotiated solution, but Beijing hasn’t changed its behavior. -Bloomberg
Mixed
signals
Ongoing
tensions between Steve Mnuchin and Wilbur Ross have complicated
matters and resulted in mixed messages, according to Bloomberg's
sources.
As the de facto spokesman on economic matters within the cabinet, Mnuchin took the lead early in the negotiations. But at different points in the talks, other more hawkish members of the administration have taken the helm, such Ross, which has confused the Chinese. -Bloomberg
President
Trump is also said to have grown frustrated with China's reluctance
to come to the table with more concessions - particularly after the
United States reversed a decision to impose harsh restrictions on
Chinese telecom-equipment manufacturer ZTE Corp., according to a
White House official who did not want to be identified.
Trump
also doesn't think China has been very helpful with regards to
encouraging North Korea to abandon their nuclear weapons program.
“We
agreed to the denuclearization of North Korea,” Trump tweeted on
Monday. “China, on the other hand, may be exerting negative
pressure on a deal because of our posture on Chinese Trade-Hope Not!”
I have confidence that Kim Jong Un will honor the contract we signed &, even more importantly, our handshake. We agreed to the denuclearization of North Korea. China, on the other hand, may be exerting negative pressure on a deal because of our posture on Chinese Trade-Hope Not!
Meanwhile, Chuck Grassley (R-IA) has a “great deal of concern” about the friction with China - and in particular, the uncertainty it’s creating among Iowa farmers and businesses. Soy futures, a target long expected for China’s retaliation, have fallen around 16% since the end of May making life for US farmers especially painful.
Chinese
Refiner Stops U.S.
Oil Imports, Turns To
Iranian Crude
9
July, 2018
An
independent Chinese refiner has suspended crude oil purchases from
the United States and has now turned to Iran as one of its sources of
crude, media reports,
citing an official from the refiner, Dongming Petrochemical Group.
What’s more, the source
said that Beijing is planning to slap tariffs on U.S. crude oil
imports and replace them with West African and Middle Eastern crude,
including crude from Iran. China has already said that it will not
comply with U.S. sanctions against Iran and it seems to be the only
country for now in a position to do this.
U.S. crude oil exports to
China reached 400,000 bpd at the beginning of this month, but now
Beijing is planning to impose a 25-percent tariff on these as part of
its retaliation for Trump’s latest round of tariffs on US$34
billion worth of Chinese goods. The retaliation began with tariffs on
545 U.S. goods worth another US$34
billion,
but, Reuters reports,
the oil tariffs will be announced at a later date.
Energy
analysts seem to believe that these oil tariffs are more or less a
certainty, and now expect a reshuffle of crude oil imports to Asia.
With China turning to Iran for its crude, U.S. oil could start
flowing in greater amounts to another leading importer in the region,
South Korea.
“If
China retaliates with tariffs on U.S. crude, that could improve South
Korea’s terms of buying U.S. crude...because the U.S. would need a
market to sell to,” on analyst, from the Korea Energy Economic
Institute.
Meanwhile,
South Korea’s embassy in Iran this weekend rejected media
reports that the country had suspended oil purchases from Iran under
pressure from the United States. The country is the third-biggest
buyer of Iranian crude in Asia, buying Iranian crude at an average
daily rate of almost 300,000 barrels since March this year.
By
Irina Slav for Oilprice.com
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