(Bloomberg) -- Closely watched trade talks between the U.S. and China wrapped up on Thursday with no major progress, setting the stage for further escalation of the trade war between the world’s two largest economies.
The two sides had met low expectations for this week’s meetings and no further talks had been scheduled, a person familiar with the discussions said. The person, who requested anonymity to discuss the private deliberations, also said Chinese officials had raised the possibility that no further negotiations could happen until after November’s mid-term elections in the U.S.
In a statement, the White House said the countries “exchanged views on how to achieve fairness, balance, and reciprocity in the economic relationship, including by addressing structural issues in China” identified by the U.S. in an investigation into Chinese intellectual-property practices. The two nations had "constructive, candid" communication, and will keep in touch about the next steps, the China commerce ministry said in a statement released Friday.
The conclusion of the talks came just hours after Beijing and Washington rolled out their latest round of tit-for-tat tariffs on Thursday. The $16 billion in imports hit by each side took the total value of goods covered as a result of President Donald Trump’s trade war with China to $100 billion.
But the Trump administration is preparing a far larger tranche of tariffs covering some 6,000 products from China with an annual import value of $200 billion that are expected to take effect as early as next month.
China’s Retaliation
That move and the anticipated retaliation from the Chinese would mark the largest escalation so far of the trade war between the two economies and take it into new territory in terms of both scale and by starting to hit American consumers more directly.
The two days of talks led by U.S. Treasury Undersecretary for International Affairs David Malpass and Vice Commerce Minister Wang Shouwen marked the first major interaction between the two sides since June.
According to the person familiar with the discussions, the U.S. Treasury presented a revised version of the provocative list of demands presented by the Trump administration when the two sides had their first high-level meetings in May.
The Chinese delegation, meanwhile, showed no signs of bringing any significant compromises to the table this week.
Even relative doves inside the Trump administration have begun pressing for China to make significant structural reforms by unwinding industrial subsidies and at least scaling back its "Made in China 2025" plan to lead the world in industries such as artificial intelligence and robotics. Yet the Chinese side has continued to offer only increased purchases of American commodities aimed at reducing the U.S. trade deficit, believing that is the best tactic to try and see off further U.S. tariffs, said the person familiar with the discussions.
Trump’s Rhetoric
Trump on Thursday highlighted new tougher restrictions aimed at Chinese investment in the U.S. at a White House event and said he was committed to continuing his trade fight against China. “We can’t allow the things that were happening to happen,” Trump told a meeting with legislators.
The U.S. president this week rekindled his campaign accusations that Beijing is engaging in currency manipulation, long one of the most sensitive friction points between the two countries.
His trade team is also proceeding with additional efforts to raise pressure on Beijing.
U.S. officials are due to meet in Washington on Friday with delegations from the European Union and Japan to discuss joint efforts to confront China at the World Trade Organization over its industrial subsidies and the conduct of its state-owned enterprises.
More provocatively, hawks in the administration including Robert Lighthizer, the U.S. trade representative, are eager to move forward with plans to impose tariffs on the additional $200 billion in Chinese imports.
In hearings this week in Washington, U.S. companies and industry lobbyists have been offering their mostly negative feedback on the proposed additional duties of as much as 25 percent.
The goods to be covered in the next round of tariffs range from chemicals, raw materials and seafood to vacuums, bicycles and furniture. The U.S. could impose the duties after a comment period ends Sept. 6.
“This is a political game being played with my company as the game piece,” Ross Bishop, president of BrightLine Bags Inc., testified on Monday. The California-based company makes nylon gear bags for pilots and other customers, and Bishop pleaded with the trade panel to “help me keep my company alive.”
(Updates with comment from Chinese commerce ministry in third paragraph.)