U.S. President Donald Trump said on Wednesday that U.S. tariffs on Chinese imports could remain in place for a “substantial period,” dampening hopes that a new trade agreement would see them lifted soon.
Top American trade negotiators are due to travel to Beijing next week for a fresh round of talks, and officials have said they were in the final stages of negotiations on resolving the eight-month trade war with China.
Washington and Beijing are battling over the final shape of an agreement, with American officials demanding profound changes to Chinese industrial policy.
While recent comments that the talks are going well has fueled optimism, Trump seemed to dash hopes trade relations between the world’s two largest economies would return to normal. “We are talking about leaving them for a substantial period of time,” Trump said of the tariffs. “We have to make sure that if we do the deal with China, that China lives by the deal.”
Trump again told reporters at the White House the talks with Beijing were “coming along nicely.” But American officials have insisted that any agreement have teeth—including the ability to impose tariffs unilaterally should China begin backsliding on any commitments to end alleged unfair trade practices.
Over the last eight months, the United States and China have slapped tariffs on more than $360 billion in two-way goods trade, weighing on the manufacturing sectors in both countries.
On Friday, China’s rubber-stamp parliament approved a foreign investment law to strengthen protections for intellectual property—a central U.S. grievance—but critics said the bill was rammed through without sufficient time for input from businesses.
Beijing also has expressed willingness to increase purchases of American commodities such as energy and soybeans but analysts say they will be reluctant to accede to demands that could weaken the communist party’s hold on power—such as fully exposing state enterprises to market forces.
Trump initially said he expected to seal any final bargain at a summit with Chinese President Xi Jinping later this month but that expectation has faded as momentum in the talks has slowed.
Despite Trump’s trade wars, the U.S. trade deficit with China last year hit a record, as avid U.S. consumers drew in foreign-made goods while weakened U.S. sales of agricultural commodities weighed on American exports.
Elsewhere on Wednesday, the Federal Reserve cut its growth forecasts for the U.S. and Chairman Jerome Powell told reporters the global economy had begun to slow, notably in China, where tariffs were one obstacle to faster growth. “I would say tariffs may be a factor in China,” Powell said. “I don’t think they’re the main factor.”
U.S. businesses continue to express “a lot of concerns” about the tariffs, raising materials costs and cutting off access to foreign markets, he said.
On a volatile day of trading and with investors mostly preoccupied by the Fed policy meeting, Wall Street shuddered at Trump’s trade remarks before closing the day mostly negative, with the benchmark Dow Jones Industrial Average down 0.6 percent.