STEVE INSKEEP, HOST:
A group of midlevel U.S. trade officials has begun talks today in Beijing. They're working toward a trade agreement. The United States wants concessions in Chinese business practices. And, in exchange, the U.S. would eliminate tariffs recently imposed on Chinese goods. NPR's Rob Schmitz joins us from Shanghai.
Hi there, Rob.
ROB SCHMITZ, BYLINE: Good morning.
INSKEEP: I guess we should bear in mind, they're talking about getting rid of these tariffs, but tariffs could also go up, right?
SCHMITZ: That's right. President Trump and Chinese leader Xi Jinping agreed a month ago at a dinner meeting at the G-20 in Argentina that they'd hash out their differences over a 90-day period in the hopes that they'd reach a deal in that time. That 90-day period ends on March 2. And if the two sides don't come to a new trade agreement by then, the Trump administration plans to increase tariffs on $200 billion worth of Chinese imports from 10 to 25 percent. Both countries have had tariffs on hundreds of billions of dollars' worth of each other's goods since last summer.
INSKEEP: Would you just remind us, for people who are coming back to the news after the holidays, what are the sticking points here?
SCHMITZ: Well, the Trump administration has a list of demands. It wants Beijing to end its practice of forcing American companies to hand over key technology in return for doing business in China. It also wants China to buy more products from the U.S. in order to reduce the trade deficit, and it wants a fairer playing field for U.S. companies inside of China. Now, Beijing's prepared to buy more American products. That's easy enough to meet the demands of hundreds of millions of consumers here. But what's going to be difficult for the Chinese side is to level the playing field for U.S. companies inside of China. And to do that properly would require significant changes in how China manages its economy, changes that would put the Chinese government and its state-owned enterprises in a vulnerable position.
INSKEEP: Well...
SCHMITZ: So that is the big sticking point from Beijing's perspective.
INSKEEP: Well, let's think that through. You have to assume that China would only do that if they faced enormous pressure, if they faced enormous pain. The United States is attempting to impose this pain through 10 percent tariffs and threaten more pain with 25 percent tariffs, should it go through with that. So that then raises a question. Is it possible to tell, Rob, if the tariffs are having that much of an effect - a negative effect on China right now?
SCHMITZ: Well, there has been a lot of chatter among Chinese economists about this in recent months. And the consensus is that, yes, China's economic growth is slowing more than anticipated since the tariffs were imposed. You know, and this is backed up by lower-than-expected consumption numbers in China and also from announcements like Apple CEO Tim Cook's not too long ago that his company's numbers would be worse than expected due to China's downward economic trend. So, yes, there is some data here and evidence that China's economy is hurting because of this.
INSKEEP: And that's - is an interesting point. U.S. tariffs, in a way, hurt American consumers because they raise prices of goods here. I suppose Chinese retaliation raises prices of goods in China, right? And so that might affect Chinese consumers in a way.
SCHMITZ: Absolutely. If those tariffs remain, imports into China from the U.S. are, you know, of course, tariffed. And, of course, you know, China's consumer group - the consumers of China really rely on a lot of increasingly imported goods, and a lot of those imported goods are from the United States.
INSKEEP: OK. Rob, thanks for the update, really appreciate it.
SCHMITZ: Thank you.
INSKEEP: NPR's Rob Schmitz is in Shanghai.
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