Welcome to the 258th edition of Trade War.
Chinese state social media report the US has reached out for trade talks, calling Washington “the more anxious party.” China’s commerce ministry says it wants US to show “sincerity” before discussions begin. And workers protest as Chinese factories cancel orders and cut staff.
Trump says Chinese getting “absolutely hammered” by tariffs but price hikes and product shortages to soon hit American consumers. And fast fashion retailer Shein preemptively raises prices up to 377% on US-bound products, including cleaning towels and lip balm.
China’s sovereign wealth fund cuts American asset holdings. Beijing quietly extends Chinese tariff exemptions, affecting some 25% of US imports. And Nike, Adidas and other shoe makers call Trump tariffs “unsustainable” and lobby for levy relief.
Notable/In depth ~
Jack Ma pulled into China’s global repression campaign
Overbuilt tier 3 cities threaten China’s growth
CIA releases glossy recruitment videos targeting Chinese officials
Some big news on the U.S.-China trade and tariffs front: A social media account affiliated with China’s state broadcaster is confirming that Washington has reached out to Beijing for trade talks, while on Friday, China’s commerce ministry announced it was “evaluating” the situation. This suggests China may be ready to sit down with the U.S. after more recently giving it the cold shoulder.
It also follows a chaotic period of conflicting messages on the likelihood of a deal: while U.S. president Donald Trump has been insisting that the U.S. and China are already talking, Beijing has flatly denied it.
Trump on Wednesday described China as getting “absolutely hammered,” by U.S. tariffs, while in the social media announcement from Beijing, China described the U.S. as “the more anxious party.”
China certainly is feeling economic pain from U.S. tariffs but it’s also true that the U.S. just saw its economy shrink for the first time in three years, with economic contraction (down 0.3 percent) in the first quarter. That contrasts with Chinese GDP which grew 5.4 percent in the first quarter—but China’s strong expansion was in part due to front-loading exports to beat tariffs, and certainly won’t last if the trade war continues.
So it’s good news if the two sides are getting a little closer to talking, as the latest news suggests. But it better happen fast: if the tariffs continue, the pain will get much worse for both sides very soon.
American consumers aren’t feeling the tariff shock yet, but they are about to, starting as soon as mid-May. Walmart and Target told Trump in a meeting in late last month that shoppers will soon see higher prices and empty shelves. Stock market turmoil will continue and jobs losses are almost certain. And China, whose economy is already struggling, can expect to see things get a lot worse fast too.
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