US to keep tariffs on China until it complies with trade deal: Trump

President Donald Trump said he’ll keep tariffs on China until he’s sure Beijing is complying with any trade deal, refuting expectations that the two nations will agree to roll back duties as part of a lasting truce to their trade war.

“We’re not talking about removing them, we’re talking about leaving them for a substantial period of time, because we have to make sure that if we do the deal with China that China lives by the deal,” Trump told reporters at the White House Wednesday before leaving for Ohio. “They’ve had a lot of problems living by certain deals.”

The president’s comments dim hopes that round-the-clock trade negotiations between the world’s two biggest economies could lead to them removing the roughly $360 billion in tariffs they’ve imposed on each other’s imports. Beijing has pushed the Trump administration to remove tariffs as part of any deal.

US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer are due to visit China on March 28 and 29, a Ministry of Commerce spokesman said in Beijing Thursday. Their Chinese counterpart in the talks, Vice Premier Liu He, will then travel to the US in early April, he said, adding that the three have had “several” calls recently.

When asked to respond to Trump’s comments about US tariffs being kept in place even after a deal, the spokesman said he had nothing further to say.

Pushing Back

US officials are concerned that Beijing is pushing back against some American demands in trade talks, people familiar with the matter said. Chinese officials have shifted their stance because after agreeing to changes to their intellectual-property policies, they haven’t received assurances from the Trump administration that tariffs imposed on their exports would be lifted, the people said. Despite his comments on the tariffs, Trump said “the deal is coming along nicely,” adding that top US negotiators leave for China this weekend for talks on an agreement.

Negotiation Tactics

“This is just negotiation argy-bargy” as Trump doesn’t want to give his leverage away too early, said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney. “He doesn’t want a bear market in shares and rising unemployment ruining his re-election chances next year. A deal still remains more likely than not as it’s in both sides’ interest.”

One of the remaining sticking points in talks is whether the tariffs would be lifted immediately or over a period of time to allow the US to monitor whether China is meeting its obligations, Bloomberg News reported earlier this month. The US wants to continue to wield the threat of tariffs as leverage to ensure China won’t renege on the deal, and would only lift the duties fully when Beijing implemented all parts of the agreement.

"If the US insists on keeping the tariffs in place then there is a real possibility that the deal falls apart," said David Dollar, a former US Treasury attache in Beijing, who is now a senior fellow at the Brookings Institution in Washington.