Trade war tariffs are new normal and may be difficult to remove, says former US ambassador to China
- Deadlock makes status quo likely for the rest of the year, Max Baucus says
- But Beijing and Washington have incentive to strike a deal because they ‘probably need each other’
Max Baucus, the top US envoy in Beijing from 2014 to 2017, said on the sidelines of a US-China trade relations event in Hong Kong that it would be difficult for the world’s two largest economies to cancel their existing tariffs on each other’s products.
“We have a new normal that the tariffs will continue in the indefinite future,” Baucus, also a former Democratic senator from the agricultural state of Montana, told the South China Morning Post.
“It’s very hard to roll back tariffs once they’re imposed. Both countries’ tariffs that exist today will continue for some time,” he said during the forum, attended by former senior officials including China’s former vice-premier Zeng Peiyan and Japan’s former prime minister Yasuo Fukuda.
Baucus said that the two countries had “strong forces to try to reach, if not an [final] agreement, at least an accommodation, because deep down people know we probably need each other”.
Baucus said the deadlock over tariffs and issues such as the dispute over Huawei would be difficult to resolve.
“It will be very difficult for the US to roll back tariffs,” he said. “China will also wait to see if the US actually allows US hi-tech sales to Huawei.
“Consequently, further progress will be difficult. The status quo is likely for the rest of the year.”
White House economic adviser Larry Kudlow said the phone call was constructive, and a face-to-face meeting was discussed, but he called on China to act promptly on its purchases of US agricultural products.
Since then, Beijing has said it is willing to continue negotiations but would fight the tariff war as long as necessary.
David Lampton, a professor emeritus of China Studies at the Washington-based Johns Hopkins School of Advanced International Studies, who also attended the event in Hong Kong, agreed that the existing tariffs would not easily be removed.
“Trump believes in tariffs,” Lampton said. “Therefore he will be very reluctant to give up tariffs unless he sees a big gain, which he can sell for his [2020 presidential] election.
“I don’t think tariffs is a particularly desirable policy, but on the other side, China has not addressed some legitimate American concerns.”
The US reportedly demanded China make a large number of changes to its domestic laws to protect intellectual property, curb its subsidies to state-owned enterprises and enact a strict enforcement mechanism.