U.S. tariffs on $200 billion worth of imports from China are scheduled to rise to 25% from 10% if the two sides can not reach a deal by March 1, increasing pain and costs in sectors from consumer electronics to agriculture.
Officials from the world's top two economies are holding negotiations in Beijing on Thursday and Friday in a bid to resolve their thorny trade dispute.
USA and Chinese negotiators kicked off two days of high-level trade talks in Beijing on Thursday (Feb 14), hoping to resolve a festering dispute that has cast a shadow over financial markets and global growth outlook.
Business groups and economists say the decision by the top trade envoys to participate suggests the talks might be making enough progress to require higher-level political decisions.
China's trade surplus with the USA narrowed in January even as its American imports continued to plunge, official data released on Thursday showed, as officials from the world's top two economies sat down for crucial trade talks in Beijing.
On Tuesday, Trump said that while he is not inclined to extend the deadline, he might let it "slide for a little while" if talks go well.
But despite the increase in duties collected, the USA fiscal deficit in the first quarter of the 2019 fiscal year, which began Oct 1, widened by US$94 billion to US$319 billion due to an increase in spending of almost US$100 billion, the report showed.
USA and Chinese negotiators opened talks Thursday on a sprawling trade dispute as Beijing reported its January exports rebounded despite President Donald Trump's tariff hikes.
Trump's advisers have described March 1 as a "hard deadline", but Trump told reporters a delay was possible.
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The U.S. delegation also includes Treasury Secretary Steven Mnuchin and David Malpass, a Treasury undersecretary who is Trump's nominee for World Bank president.
A U.S. official told CNN the talks had ended but didn't comment further. China has retaliated with its own measures.
"The hardliners seem loath to settle for a deal that represents anything less than total capitulation by China on all USA demands", he said.
"The downbeat outlook for global growth means that this year is likely to be challenging for Chinese exporters, even if the ongoing US-China trade negotiations culminate in a deal", Evans-Pritchard wrote in a research note.
The Hong Kong newspaper The South China Morning Post reported Monday the meeting could take place in late March on the southern Chinese island of Hainan.
"The broad trend in shipments still appears to be pointing down", he said in a report.
USA officials say allowing the Chinese company to build the next generation of wireless communications in Europe will enhance the Chinese government's surveillance powers, threatening European security.
Trump also has said he expects to meet with Xi "at some point" to clinch a trade deal. It has announced changes over the past year to open finance and other fields, including allowing full foreign ownership in its auto industry for the first time.