China said to cancel round of trade talks in U.S.

BEIJING -- China has scrapped its planned trade talks with the U.S. and is unlikely to sit down with American negotiators until after November's midterm elections, according to people familiar with the situation.

The decision to call off a planned delegation this week comes as President Donald Trump signals he's prepared for short-term pain for the U.S. economy by ramping up the trade war, in pursuit of what he sees as long-term gains from taking on China.

The White House had no immediate response to China's latest move. But hours before the Wall Street Journal first reported that Beijing had scrapped plans to send Vice Premier Liu He and a midlevel delegation to Washington, a senior U.S. official told reporters that the president believes inaction on China would ultimately leave the economy and consumers worse off.

In addition to new tariffs on $200 billion of Chinese goods, set to go into effect Monday, State Department sanctions imposed Thursday against China's defense agency and its director contributed to the decision to cancel the talks, the people said.

"It would be asking for an insult if China went ahead with trade talks after the U.S. announced new tariffs and sanctions," Shi Yinhong, a professor of international relations at Renmin University of China, said Saturday. "In the long run, there will be talks, because the trade war won't last for thousands of years."

In his push for what he calls a level playing field in dealing with China, Trump slapped the new tariffs on imports from China and threatened more if Beijing retaliated. On Aug. 18, China said it would impose levies on $60 billion worth of U.S. goods effective Monday.

The new tariffs brought "new uncertainties" to China-U.S. negotiations, Gao Feng, a spokesman for China's Commerce Ministry, said at a news conference Thursday in response to a question on whether the countries would have a new round of trade talks. He used exactly the same wording the ministry used in an earlier statement.

China's Commerce and Finance ministries didn't respond to faxes inquiring about the matter on Saturday.

U.S. industry has widely pushed back against the Trump administration's use of tariffs to force changes to China's economy, and companies such as Walmart Inc., Gap Inc. and Samsonite International SA have said they're prepared to raise prices if the new tariffs bite into their business.

Trump's biggest strike yet in a growing trade fight between the world's biggest economies involves a 10 percent duty applied to $200 billion of Chinese imports, which may rise to 25 percent in 2019. He has threatened duties on a further $267 billion of made-in-China goods, which would hit almost all other consumer products the U.S. imports from China, including mobile phones, shoes and clothes.

The latest round of duties comes on top of a 25 percent tariff already imposed on about $50 billion in Chinese goods, which spurred retaliatory tariffs from Beijing.

Trump continued to criticize China late last week, signaling the trade war won't end any time soon. "It's time to take a stand on China," he said in an interview Thursday with Fox News. "We have no choice. It's been a long time. They're hurting us."

Seema Shah and Danielle McIntee, analysts with Bloomberg Intelligence, wrote in a note Friday that "the new U.S. tariffs on Chinese goods, mostly consumer-oriented, will depress spending and hurt the retail sector beginning in 2019."

"Lower-income families, already pinching pennies, are most exposed, given the likelihood of tariff-related price increases on everyday items," the analysts said.

Commerce Secretary Wilbur Ross said the tariffs are spread over such a wide variety of goods that Americans shouldn't notice price increases.

"We were trying to do things that were least intrusive on the consumer," Ross said on CNBC last week. "We really went item-by-item trying to figure out what would accomplish the punitive purpose on China and yet with the least disruption in the U.S."

Information for this article was contributed by Miao Han of Bloomberg News.

A Section on 09/23/2018

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