Trump prepares to increase tariffs on China on Friday as negotiations resume

The US administration is moving ahead with preparations to increase its tariffs on Chinese exports on Friday even as the negotiating team from Beijing arrives in Washington for two days of talks.

At a campaign rally on Wednesday, President Donald Trump accused China of "breaking the deal".

Trump added that there was “nothing wrong with taking in $100 billion a year” in tariffs on Chinese imports, in the absence of a trade deal. “They come in tomorrow and whatever happens, don’t worry about it. It will work out. It always does,” he said.

Earlier, citing US government officials, Reuters had reported that Beijing had tried to walk back on many of the commitments it had already agreed to with Washington.

On Thursday morning, Chinese Commerce Ministry spokesperson, Gao Feng, rebutted those claims, saying: "China is credible and honors its word and that has never changed".

The main bone of contention appared to be Beijing's refusal to commit to changing its laws in order to address Washington's concerns regarding th enforceability of any deal, although several other key issues also remained unresolved, especially as pertains to the removal of America's existing tariffs.

However, according to the Wall Street Journal the change of tack on the part of China was in response to recent remarks by Trump that Beijing had interpreted as a signaling a willingness to make concessions.

Striking a similar note, IG's Josh Mahony said: "Much of the decision-making behind the Chinese backtracking on previous commitments has been associated with Trump’s insistence that the Fed should cut interest rates to better enable the economy.

"For all the talk of benefitting heavily from this trade war, the desperation to see Powell drive a more accommodative monetary policy certainly alludes to a fear that the US economy could do with some help right now."

In any case, as recently as Tuesday, US Treasury Secretary Steven Mnuchin had argued that Washington should trust Chinese vice premier Liu He to come back with a satisfactory offer to close a deal, Bloomberg reported.

But following a heated debate at the White House, it was decided that Mnuchin would only meet with Liu if progress had indeed been made at the talks.

There had been considerable optimism among analysts that a deal would finally materialise until just the week before, but now some of them appeared to be hedging their bets, cautioning of a bumpy road ahead for financial markets and speaking openly of the risk that talks may have hit a wall, which could result in a sell-off in the stock market.