How does Trump’s lack of trade deals strengthen Beijing’s hand?

The United States failed this week to reach a tariff deal with Japan, a key Pacific Rim ally, and has threatened to notify multiple countries of new duty rates on imports after talks with only one, the United Kingdom, have shown any results.

Those developments, which made the US look weak in the short term, should prompt China to take a harder line with Washington on reaching a deal, analysts said.

China, the world’s second-largest economy, was hit especially hard by US President Donald Trump on April 2, which he dubbed “Liberation Day”, when he raised duties on Chinese imports to more than 100 per cent. Citing concerns over US trade deficits, he also imposed double-digit tariffs on imports from many other Asian nations.

Country-specific “Liberation Day” tariffs were put on hold for 90 days the following week – until July 9 for most countries – pending trade negotiations. Following talks in Switzerland in early May, those on China were also paused for 90 days, until August 12.

Beijing’s negotiators would draw strength from the US threat to notify trading partners of new duties and the lack of a US-Japan deal because both showed it was hard for Washington to get what it wanted through talks this summer, said Chen Zhiwu, chair professor of finance at the University of Hong Kong.

“These kinds of threats should embolden the Chinese negotiators because it’s a sign of desperation,” Chen said.

South China Morning Post