US-China trade talks to continue on Friday as tariffs on Chinese goods set to kick in

BEIJING/WASHINGTON (REUTERS/AFP) - Top US and Chinese trade negotiators concluded the first of two days of talks on Thursday (May 9) to rescue a trade deal that is close to collapsing as Washington prepares to go ahead with plans to hike tariffs on hundreds of billions of dollars of goods imported from China.

Tension between Washington and Beijing has risen after a major setback in negotiations last week when China revised a draft deal and weakened commitments to meet US demands for trade reform.

President Donald Trump responded by ordering a tariff hike, and China has said it would retaliate. The 10-month-old trade war has already cost companies in both countries billions of dollars.

Chinese Vice-Premier Liu He, US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday and were expected to resume talks on Friday. Officials did not speak to reporters as they left the talks.

US President Donald Trump met Mr Lighthizer and Mr Mnuchin on Thursday to discuss the negotiations to rescue a trade deal that is close to collapsing as Washington prepares to go ahead with plans to hike tariffs on hundreds of billions of dollars of goods imported from China.

In comments to Chinese state media upon arriving in Washington, Liu said that hiking tariffs "is very disadvantageous to both parties".

"We come here this time, under pressure, which shows China's greatest sincerity, and want to sincerely, confidently, and rationally resolve certain disagreements or differences facing China and the United States. I think there is hope," he said.

Mr Liu arrived in Washington on Thursday (May 9), with the US set to impose higher tariffs on US$200 billion (S$273 billion) worth of Chinese goods at 0401 GMT Friday (12.01pm Singapore time).

Consumer products, including cell phones, computers, clothing and toys, are to be especially hard hit.

Mr Trump said separately on Thursday that he was "starting... paperwork today" to impose a 25 per cent tariff on the US$325 billion in Chinese goods untouched by the trade war so far.

US and Chinese officials resumed crucial trade talks on Thursday, trying to resolve a year-long dispute that was on the verge of escalating with new US tariffs.

With US punitive tariffs on US$200 billion in Chinese goods set to jump to 25 per cent just after midnight, President Trump said earlier on Thursday that an agreement remains "possible".

He told reporters he had received a letter from his Chinese counterpart Xi Jinping, and would likely speak to him by telephone later.

"It's possible to do it," Mr Trump said of the trade deal at the White House. "I did get last night a very beautiful letter from President Xi." But Mr Trump warned that he was also more than happy to use tariffs in resolving his differences with China.

"I am different than a lot of people. I happen to think that tariffs, for our country, are very powerful."

Meanwhile, Hu Xijin, the editor-in-chief of Chinese state-run newspaper the Global Times, tweeted on Friday that the talks in Washington will continue on Friday morning US time.

"I just called someone who is close to the negotiations in Washington and was told the two sides just finished Thursday's talks. They will have another negotiation Friday morning US time. In other words, negotiations will extend beyond the time when the US starts to raise tariffs," Hu tweeted in English. He gave no other details.

Months of increasing comity and optimism in trade talks appeared to go up in smoke this week as American officials accused China of a wholesale retreat from previously agreed commitments - a claim Beijing strongly rejected.

"They took many, many parts of that deal and they renegotiated. You can't do that," Mr Trump said on Thursday.

Since early this year, the trade talks have worked to resolve Washington's grievances of industrial theft, massive state intervention in markets and a yawning trade deficit.

China's Commerce Ministry warned Beijing would not "capitulate to any pressure" and threatened retaliation if US tariffs go up to 25 per cent as scheduled on Friday - punctuating the drastic deterioration after months of seemingly collegial talks.

"The Chinese side has kept its promises and this has never changed," he added, without specifying what measures Beijing would take but warning that it "has already prepared for all possible situations".

Since last year, the two sides have exchanged tariffs on more than US$360 billion in two-way trade, gutting US agricultural exports to China and weighing on both countries' manufacturing sectors.

The International Monetary Fund also repeated its warning on Thursday that the trade battle between the world's top economies was a "threat" to global growth.