Chinese Ministry of Commerce spokesman Gao Feng confirmed to reporters on Thursday what the Global Times had already leaked previously, namely that tariffs must be reduced by the US to reach a phase one trade deal, reported Reuters.
“The Chinese side believes that if the two sides reach a phase one deal, tariffs should be lowered accordingly,” Feng told reporters.
His comments were a reiteration of Beijing’s hard stance of tariff rollbacks in the last month or no phase one trade deal. Feng said both trade teams are in communication, but didn’t say if the trade talks were going well.
Completion of a phase one deal was expected last month before the next round of US tariffs kick in on Dec. 15. The latest comments coming from Beijing and the Trump administration suggests the prospects of an interim deal might be pushed out to sometime in 2020.
On Tuesday, President Trump said a trade deal with China could occur after the 2020 election.
“In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right,” Trump said.
Then on Wednesday, the Chinese Ministry of Foreign Affairs Spokeswoman Hua Chunying said: “We do not set a deadline for reaching an agreement or not.”
“Our attitude has always been clear, that is, consultations must be based on equality and mutual respect, and that the outcome must be mutually beneficial and acceptable to both sides,” Chunying said. “We hope that some people in the U.S. will earnestly heed the call of its people.”
Despite both trade teams at a standstill over “core issues of concern,” the recent Hong Kong and Uighur bill has made the probabilities of an interim deal less likely in 2019, as tensions between both countries continue to escalate.
“My sources here say #China thought it had an agreement in principle on tariff rollback in early Nov but President Trump backed away from it. So unclear how “close” two sides really are. 🤔 @business U.S., China Move Closer to #Trade Deal Despite Harsh Rhetoric.”
Then Fox Bussiness released a headline on Wednesday describing how both trade teams haven’t spoken in eight days, which contradicts Trump’s comments earlier in the week that he’s been in constant contact.
None of this mattered to algos who BTFD based on an anonymous report from Bloomberg which said nothing new but merely sparked optimism that a deal may happen even though we are now just 10 days away from the Dec 15 tariff deadline.
Meanwhile, Trump rolling back tariffs for an interim deal without addressing core intellectual property and technology transfer issues is likely not going to happen, which means the trade war could easily escalate rapidly in just 11 days.