The Washington PostDemocracy Dies in Darkness

Trump says U.S.-China talks are within reach of a breakthrough in trade relations

February 15, 2019 at 5:26 p.m. EST
U.S. Treasury Secretary Steven Mnuchin, second from left, talks with Chinese President Xi Jinping, second from right, on Friday at the Great Hall of the People in Beijing. They are joined by U.S. Trade Representative Robert E. Lighthizer, left, and Chinese Vice Premier Liu He. (Andy Wong/AFP/Getty Images)

President Trump said this week’s talks in Beijing had brought the United States and China within reach of a breakthrough in their trade relations, despite his administration’s own assessment that “much work remains” before a deal can be struck.

The president again vowed that any agreement will address the full range of U.S. complaints about China’s behavior, including deep-seated structural features of its economic model.

“We’re a lot closer than we ever were in this country with having a real trade deal,” the president said Friday during a Rose Garden news conference about his national emergency declaration. “We’re covering everything, all of the points that people have been talking about for years and said couldn’t be done.”

Fearing Trump’s China tariffs may never end, companies are taking action

Trump spoke several hours after Treasury Secretary Steven Mnuchin tweeted that the two days of talks had been “Productive.” But the administration offered no evidence that the two sides had significantly narrowed their differences.

“Everyone thinks it’s a stalemate,” said one analyst, who has talked with U.S. negotiators and spoke on the condition of anonymity to discuss confidential matters. “The president is wishing something there that isn’t and is trying to will it to be.”

Negotiations are set to continue next week in Washington and are aimed at reaching a memorandum of understanding before Trump’s self-imposed March 1 deadline.

The president also raised the bar on what would constitute success, telling reporters: “It’s going to be better than any deal that anybody ever dreamed possible, or I’m not going to have a deal; it’s very simple.”

Fresh off a border security compromise that angered some prominent conservatives, Trump seemed sensitive to criticism of his dealmaking. He complained that Democratic leaders would assail whatever deal he reaches with Beijing and said he is considering inviting House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles E. Schumer (D-N.Y.) to join the talks.

“Any deal I make, toward the end I’m going to bring Schumer — at least offer him — and Pelosi. I’m going to say, “Please join me on the deal,’ ” the president said.

Mnuchin and U.S. Trade Representative Robert E. Lighthizer, the chief U.S. negotiator, met with Chinese President Xi Jinping before heading to the airport Friday.

In pursuing a trade deal, the U.S. may be asking China to do the unthinkable

“I have said many times that China and the United States are inseparable from each other. Cooperation serves the interests of the two sides and conflict can only hurt both,” Xi said, according to state broadcaster CCTV. “The consultations between the two teams have made important progress.”

In Washington, analysts say the talks are likely to continue for 60 days past the March 1 deadline. If no deal is reached, the current 10 percent tariff will rise to 25 percent on $200 billion worth of Chinese goods.

The president said he might extend the deadline if progress were made. Trump also has said that a final settlement won’t be possible until he meets with Xi, which some analysts said made it less likely that Chinese negotiators would make concessions before then.

“You have to wonder: Is all of the positive talk just a way to manage expectations and the stock market, when everyone knows this won’t be resolved until Trump and Xi meet?” said Jeff Moon, a U.S. trade negotiator in the Obama administration.

The White House said the U.S. negotiators emphasized “structural issues, including forced technology transfer, intellectual property rights, cyber theft, agriculture, services, non-tariff barriers, and currency.”

Chinese officials this week renewed a proposal to massively increase purchases of American semiconductors. But the plan is opposed by U.S. companies because it would involve relocating assembly plants to China from Malaysia and Mexico.

Under the offer, U.S. companies would ship their chips directly to China from the United States — so that they would count as U.S. exports — rather than sending them first to third-country plants.

“We are concerned China’s reported offer to dramatically increase purchases of U.S. semiconductors would rearrange U.S. supply chains and artificially force them deeper into China,” said John Neuffer, president of the Semiconductor Industry Association. “Perhaps our greatest concern is this can act as a distraction from addressing the fundamental issues at the heart of the dispute: China’s problematic trade practices related to intellectual property, forced tech transfer, and state subsidies.”

Trump wants to narrow the U.S. trade deficit with China, which is expected to have exceedsd a record $400 billion in 2018. Beijing has already pledged to buy more American products, such as soybeans and liquefied natural gas.

Some analysts say that Trump, facing political troubles at home, might settle for narrowing the trade deficit through Chinese purchases of American goods rather than insisting on fundamental changes in China’s economy.

“President Trump is much more interested in somewhat symbolic wins, in particular China’s commitment to purchase a given amount of U.S. goods, than he is in the more abstract structural issues,” said Michael Hirson, Eurasia Group’s director for China.