US accuses China of reneging on trade talk commitments

US accuses China of retreating from previous pledges, in a new blow to hopes of a trade deal.

US Treasury Secretary Steven Mnuchin, left, and Trade Representative Robert Lighthizer at a recent group photo session in Beijing. Pic: AP

US Trade Representative Robert Lighthizer has directly accused China of retreating from its previous pledges on trade, dealing another blow to hopes of a deal to end the trade war between the economic superpowers.

Mr Lighthizer declared that China will be hit by increased tariffs on Friday, as was threatened the previous day in tweets by President Donald Trump.

“Over the course of the last week or so, we’ve seen an erosion in commitments by China, I would say retreating from commitments that have already been made, in our judgment,’ Mr Lighthizer said.

“That, in our view, is unacceptable.”

He accused the Chinese of seeking to make “substantial” changes in the agreed text of a nearly 150-page agreement.

“Really, I would use the word reneging on prior commitments,” he said.

China is understood to have tried to backtrack on a pledge to change its laws to prohibit the forced transfer of technology from US companies doing business in China - a key US demand.

China has also been pushing for an immediate end to all US tariffs as part of any deal, while Washington wants to keep some tariffs in place to ensure China’s compliance with whatever deal is agreed to.

The were wild gyrations on US and world markets after the President threatened to lift US tariffs on $US200 million of Chinese goods by Friday because he said talks to resolve the dispute were going too slowly.

The Dow Jones Industrial Average fell 471 points when it opened, but soon recovered and ended the day at 26,438.48, down less than 67 points or 0.25 per cent.

The rebound in US stocks was seen as a sign that investors were shrugging off the latest US threats as potential posturing.

However Mr Lighthizer’s comments are the strongest indication yet that the Trump administration intends to enact Mr Trump’s threat, barring an unexpected resolution in the coming days.

China has confirmed that is still plans to send a trade delegation to the US on Wednesday but it is unclear whether China’s Vice Premier Liu He will be part of that delegation, as planned.

Mr Lighthizer announced the administration would introduce a long-delayed increase in tariffs on $US200 billion of goods to 25 per cent from 10 per cent, effective Friday. The US had delayed implementing the tariffs in recent months in the hope that a deal could be negotiated with China to resolve the dispute.

But Mr Lighthizer said talks would still continue in the coming days before the tariff rise came into effect.

“We’re not breaking off talks at this point. But for now ... come Friday there will be tariffs in place,” he said.

His comments were supported by Treasury Secretary Steve Mnuchin, who confirmed that the talks between the two went “substantially backward,” at the weekend.

In addition to raising tariffs on $US200 billion worth of Chinese goods, Mr Trump has threatened to ­impose tariffs on an additional $US325bn of Chinese goods “shortly” if there is no truce reached ­between the countries.

Mr Trump is said to be wary of agreeing to any trade deal with China that does not include structural changes to remove or lessen unfair trading practices by China.

US businesses want to see a deal that not only promises much larger purchases of US goods by China but one that makes it easier to do business with Beijing.

During the past year Mr Trump has increased tariffs on about half of all imports from China in an attempt to reduce the size of the trade deficit between the two countries and to pressure China to adopt more open and fair trade rules.

China has retaliated by imposing its own tariffs on about 70 per cent of its imports from the US.

(Cameron Stewart is also US Contributor for Sky News Australia)