Tensions between the US and China increased on May 4 as it emerged that US officials had handed Beijing a list of demands including a $200bn cut in its trade deficit and an end to state subsidies on strategic industries. The two days of talks in Beijing between Steven Mnuchin, the US Treasury Secretary, and Liu He, PRC Vice Premier, ended on May 4 after weeks of escalating rhetoric between the two nations. A statement released by the official Xinhua news agency described the talks as “frank, efficient and constructive” but added that there remained “significant disagreements over certain issues”. No joint statement was released. 

The US also called for China to immediately stop providing subsidies to certain industries. China must end some of its policies related to technology transfers, where foreign companies are forced to hand over key technologies in exchange for access to China, a key source of tension underlying the dispute.

China has already announced tariffs on some US agricultural goods and threatened to others.

On Thursday over 1,000 economists – including 14 Nobel laureates – wrote to Trump, warning that his hardening stance on trade threatened to repeat the mistakes the US made in the 1930s, when the Smoot-Hawley Tariff Act triggered a trade war that is widely seen as one of the catalysts for the Great Depression.