U.S. Retreat on New Tariffs Gives Beijing Breathing Room on Trade Talks

China’s President Xi Jinping on the sidelines of the G-20 summit in Japan in June. Photo: brendan smialowski/Agence France-Presse/Getty Images

BEIJING—The Trump administration’s move to postpone the imposition of tariffs on $156 billion in Chinese goods is being regarded in Beijing as a step toward detente, Chinese experts say, increasing the likelihood that China sends negotiators to attend scheduled face-to-face trade talks in September.

The tariff retreat is an attempt to seek a “truce,” said Wang Huiyao, president of the Center for China and Globalization, a Beijing-based think tank, which advises the government on trade issues. “It is a face-saving gesture to continue meeting in September.”

While a senior U.S. official has said explicitly that the reprieve isn’t meant as an olive branch toward Beijing, the move was likely received in China both as a conciliatory gesture and as an implicit admission that by levying tariffs on Chinese goods, the U.S. would be hurting its own economy, experts said.

For China, the tariff delay, which will exempt planned levies on smartphones, toys and other Chinese-made consumer products, offers some breathing room as President Xi Jinping is grappling with a restive population in Hong Kong, and preparing for the 70th anniversary of Communist Party rule on Oct. 1.

It may also help keep the trade war from escalating at a time when China’s economy is starting to flash warning signals. On Wednesday, a raft of underwhelming economic indicators, including rising urban unemployment and lackluster industrial production growth, added to evidence that the Chinese economy is rapidly weakening.

After months of twists and turns, Beijing has grown more accustomed to the Trump administration’s abrupt changes, and the latest tariff move won’t have any fundamental impact on China’s negotiating position, Chinese experts said.

For now, China is likely to continue to talk with the U.S. even as it keeps fighting. Taoran Notes, a closely watched Chinese social-media account that has tracked the negotiations in great detail, summarized China’s position as: “Fight and talk, talk and fight.”

China’s stance hasn’t changed despite recent U.S. moves, Taoran Notes wrote in a post that was recirculated by state-run Xinhua News Agency on Wednesday.

During a meeting between U.S. and Chinese negotiators in Shanghai in late July, the two sides agreed to hold talks again in September in Washington.

But developments since have threatened to derail progress on trade talks, raising questions over whether the next round of negotiations would even take place. On Aug. 1, President Trump abruptly announced on Twitter that he would impose on Sept. 1 a 10% levy on roughly $300 billion in Chinese goods, an apparent response to what he described as China’s failure to commit to promised U.S. agricultural purchases.

After Mr. Trump announced his plans for fresh tariffs, Beijing responded by officially announcing the freezing of purchases of U.S. agricultural products and letting its currency drop to its lowest level in a decade. A weaker yuan makes Chinese exports cheaper.

Now, as Mr. Trump stays his hand on some of the new planned tariffs, China could resume farm purchases as a reciprocal gesture, said Wang Yong, director of the Center for International Political Economy Research at Peking University. “In the future, the economic situation of both sides will play a major role in dictating the direction of the talks,” Mr. Wang said.

China’s Ministry of Commerce didn’t respond to a request for comment.

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