US-China Trade Talks: Trump Signals Possibility of Deal Amidst Tariffs
February 19, 2023
On Wednesday evening, February 19, US President Donald Trump expressed optimism about reaching a trade deal with China. The statement comes amidst ongoing 10% tariffs imposed by Washington on all Chinese imports since early February.
"We had a great trade deal with China in 2020, and it’s possible we can do another," Trump told reporters aboard Air Force One. "We have a little bit of a competition going on with China, but the relationship that I have with President Xi [Jinping] is, I would say, excellent."
Since the start of his second term in late January, Trump has prioritized tariffs as a tool to reduce the United States’ substantial trade deficit. In early February, he imposed additional 10% tariffs on all products imported from China. Beijing retaliated with 15% tariffs on coal and liquefied natural gas (LNG) and 10% on oil and other goods, though these measures were significantly smaller in proportion.
China has the largest trade surplus with the United States in terms of goods, amounting to $295.4 billion in 2024, according to the Bureau of Economic Analysis, a division of the US Department of Commerce. The United States accounted for nearly 15% of China’s exports in 2024, based on data from Chinese customs.
Additional Tariff Threats
On Wednesday, Trump also announced that he was "thinking about" imposing 25% tariffs on lumber and forestry products "around April 2." According to the US International Trade Commission (ITC), Canada is the leading supplier of forest products, accounting for nearly half of US imports. Along with Mexico, Canada is also facing 25% tariffs on all its products, although Trump has granted a temporary exemption until March 1 for both countries.
This latest threat joins a number of others targeting the automotive, semiconductor, and pharmaceutical sectors, all of which face at least 25% tariffs that could be implemented as early as April. Washington is also set to impose new 25% tariffs on steel and aluminum imports from all trading partners. Additionally, Trump has vowed to impose "reciprocal tariffs" on all trading partners, without specifying a timeline.
Impact of Tariffs on US Economy
The impact of the tariffs on the US economy is uncertain. Economists warn that they could lead to higher prices for consumers and businesses, while also harming certain industries. However, the administration contends that the tariffs are necessary to protect American jobs and reduce the trade deficit.
Significance of US-China Trade Talks
The US-China trade talks are of paramount importance to both countries and the global economy. A deal would remove a major source of uncertainty for businesses and investors. However, the talks have been complex and challenging, with both sides holding firm to their positions.
The continuation of the talks amidst ongoing tariffs suggests that both the United States and China are willing to negotiate and find a compromise. However, the path forward is unclear, and the threat of additional tariffs remains a potential obstacle.
