US-China deal seems dim but possible as talks stay on track

A man looks at his smartphone near a display showing stock prices at a brokerage house in Shanghai Monday, May 6, 2019. China's benchmark Shanghai Composite index dives on U.S. President Donald Trump threat of more China tariffs. At right is a reflection off a display board. (AP Photo)

JOE McDONALD and PAUL WISEMAN AP Business Writers

Originally Published: May 6, 2019 12:04 p.m.

BEIJING (AP) — By threatening to raise taxes on Chinese imports, President Donald Trump is throwing down a challenge to Beijing: agree to sweeping changes in China's government-dominated economic model — or suffer the consequences.

The unexpected ultimatum, delivered via tweets on Sunday and Monday, shook up financial markets that were convinced the world's two biggest economies were on track to resolve a year-long standoff over trade, perhaps by the end of the week.

"It's a significant change in the president's tone," said Timothy Keeler, a partner at the law firm Mayer Brown and former chief of staff for the U.S. Trade Representative. "It certainly increases the possibility that you'll have no deal."

For weeks, Trump administration officials had been suggesting that the U.S. and Chinese negotiators were making steady progress. A Chinese delegation is due to resume talks in Washington on Wednesday.

Suddenly on Sunday, Trump said he'd lost patience: "The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!" Trump tweeted.

He vowed to raise tariffs on $200 billion in Chinese imports from 10% to 25% on Friday. And he said he planned "shortly" to slap 25% tariffs on another $325 billion in Chinese products, covering everything China ships to the United States.

Global stock markets sank Monday, but shares in the United States regained some of the lost ground on news that Chinese officials were planning to go ahead with this week's meetings in Washington. Still, the Chinese government did not provide details on exactly when talks would resume and who would be on China's negotiating team.

The two countries are engaged in high-stakes commercial combat over China's aggressive push to establish itself as a technological superpower.

The United States accuses Beijing to predatory practices, including hacking into U.S. companies' computers to steal trade secrets and forcing foreign firms to hand over technology in exchange for access to the Chinese market.

Wiseman reported from Washington