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Think Tank: China Tariffs Truce Still Fragile

Think tank scholars said they think it's possible that tariffs on Chinese goods could decline by 20 percentage points after the two countries' presidents meet in a month, but that it's also possible that tariffs could soar again if President Donald Trump is angered by China's support for Russia, Iran or aggression toward the Philippines.

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The Center for Strategic and International Studies' Ilaria Mazzocco, who studies Chinese business and economics, said, "This is a moment where there’s been a ceasefire -- that could end very suddenly. I think it’s still a very, very fragile moment."

She said she thinks the fact that U.S. tariffs and Chinese tariffs have been holding at their current level for months has lulled people into complacency.

Mazzocco and other CSIS scholars talked about the prospects of the talks between President Xi Jinping and Trump on Oct. 6.

Bonny Lin, director of CSIS's China Power Project, said she doesn't think whatever deal is arrived at this year will be as large as the phase one deal. She said that China attempted to buy better relations with the U.S. with its purchase promises, and they see that as a failure.

However, she said it is possible they'll promise to buy 500 Boeing jets and soybeans in exchange for U.S. concessions.

Former Biden administration National Security Council staffer Henrietta Levin, now at CSIS, said China believes it has the upper hand in negotiations, particularly since they got the U.S. to back down on 145% tariffs after halting exports of rare-earth magnets.

Mazzocco said, "The trade war with the United States has not broken the Chinese economy," but that doesn't mean they're happy to leave the status quo level of U.S. tariffs on their goods. She said they would much prefer an average tariff of 30%, rather than 55%.

Some export restrictions on the U.S. side were also rolled back when tariffs were reduced, and CSIS scholars expressed concern that looser U.S. export controls would be traded for soybean purchases by China.

Tom Christensen, a top CSIS China scholar and former China desk official at the State Department during the George W. Bush administration, said the U.S. shouldn't negotiate on restrictions on semiconductor chips, chip manufacturing equipment, or its language around Taiwan.

"Even putting certain things on the table, I think, is a mistake," he said.

While Christensen said China could get reductions in tariffs for more aggressive enforcement on fentanyl exports, he also could see no reductions if China is angered about the U.S. plan to impose 40% tariffs on goods from other countries with too much Chinese content, Trump's so-called "transshipped goods" rate.

That is a "big issue in places like Korea and Japan," he said. "It’s hard to imagine how it would be executed in practice. But if it were effectively leveled … it would be very damaging to the Chinese economy. I think they know that and want to prevent that."