The UK will resist any US attempts to use talks on trade and tariffs to pressure the Government to cut its dealings with China, The i Paper has been told.
US reports emerged on Wednesday that the Trump administration will seek to use ongoing tariff negotiations with more than 70 countries to isolate China’s economy in return for lower import levies.
The White House is locked in a trade war with Beijing after Donald Trump slapped China with 125 per cent tariffs on all US imports from the Asian giant.
The UK is among dozens of nations seeking to have tariffs on exports to the US removed as part of its trade talks.
But a senior government source insisted that the US trade talks will not dictate the UK’s position towards China, stating: “Our position and approach [towards] China is clear.”
The source added that talks with the US and the UK’s dealings with Beijing should “not be conflated”.
Downing Street is committed to continuing its “pragmatic” approach to Beijing, with ministers expected to try to revive the UK-China joint economic and trade commission (Jetco), which ground to a halt in 2018 after diplomatic relations plummeted due to China’s actions in Hong Kong.
Keir Starmer’s efforts to recalibrate the UK’s relationship with Beijing came under strain this week after the Government was forced to ram through emergency legislation to wrest control of British Steel from its Chinese owners, Jingye, due to fears of the future of the industry.
Business Secretary Jonathan Reynolds said on Sunday that he would not “personally bring a Chinese company into our steel sector” – although he later appeared to row back on these comments – following claims executives had tried to “sabotage” the last two blast furnaces in the UK.
On Wednesday a spokesman for the Chinese embassy in the UK appeared to stoke the row by describing the “anti-China rhetoric of some British politicians” as “absurd, reflecting their arrogance, ignorance and twisted mindset”.
They added: “Had it not been for the involvement of this Chinese company, British Steel workers might have already faced the risk of unemployment.
“At a time when the US is wielding the tariff stick against all countries, the UK included, and engaging in unilateral and protectionist trade bullying, those British politicians just keep slandering the Chinese government and Chinese enterprises instead of criticizing the United States. What on earth are they up to?”
In its first comments since the UK took control of Jingye – but stopping short of nationalisation – the Chinese company called for the government to “respect and protect” its rights as a foreign investor.
In a statement to the Financial Times Zengwei An, chief executive of Jingye British Steel, said the company understood the emergency law but it “request[s] that the UK government respect and protect the legitimate rights and interests of Jingye as a foreign investor throughout this process”.
Despite his earlier comments Reynolds is expected to travel to China later this year in a bid to revive talks on trade as part of the Government’s push to secure greater investment into the UK.
According to the Wall Street Journal, US officials are planning on using negotiations on tariffs to demand other countries disallow China from using tariff-free exports to second countries in order to then move on goods to America, stopping Chinese companies opening overseas, and demanding countries do not allow cheaper Chinese goods be sold in their own economies.
The tactic is part of White House plans to try to isolate China in a bid to weaken the country’s economy, which grew more than expected in the first quarter of this year by 5.4 per cent.
On Tuesday Trump himself hinted at the proposals, stating that he would force countries to choose between the US and China.
But experts have warned that the UK’s approach to China could prove to be a bigger headache for Starmer in regards to the US than its trading relations with the EU.
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Allie Renison, director at SEC Newgate and a former official at the Department for International Trade, said the trend out of Washington to encourage its allies and trading partners to move away from engaging with China is “accelerating under Trump”. And while she added the Government will be reviewing Chinese investment into critical sectors in the wake of the British Steel “saga”, she added it is “unlikely to want to divest from economic engagement with China entirely”.
“Some areas it could offer to work with the US on in this space is tackling goods dumping, circumvention of tariffs and cooperation on export controls, although Washington may want to see more substantive alignment,” she said.
“For all these reasons, while much has been said about the UK having to choose between the US and the EU, how it deals with China on trade may end up more of a dilemma.”
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