Washington, United States | AFP | The White House on Thursday stoked anticipation President Donald Trump could announce a summit with his Chinese counterpart Xi Jinping to finalize a trade agreement resolving their nine month-trade war.
Trump renewed the positive mood that officials have projected since January, telling reporters at the White House the talks were “moving along very nicely.”
“Everything is covered, there’s nothing that’s not covered,” Trump said, referring to the scope of US demands.
Both US and Chinese officials have projected cautious optimism for months but momentum slowed recently as the two sides tussled over whether and when Washington should remove the punishing tariffs it imposed last year on Chinese goods.
Chinese trade envoy Liu He is due to meet with Trump later in the day at the conclusion of the latest round of talks, while US officials have said the negotiations are near to an end one way or the other.
Last year, Trump launched a trade war with China, seeking to slash that country’s soaring trade surplus with the United States, end alleged unfair trade practices such as the theft of American technology and China’s massive state intervention in markets.
Washington and Beijing since last year have slapped tariffs on more than $360 billion in two-way trade, biting into their manufacturing sectors as the world economy shows signs of slowing.
China has offered to make sizable purchases of US commodities and taken steps to show they will protect foreign intellectual property.
– A tariff compromise? –
A final sticking point appears to be when and how Washington will agree to lift the steep tariffs it has placed on more than $250 billion in Chinese imports.
Last month, Trump said the tariffs would stay in place for “a substantial period,” although whether this would apply to both tranches of goods subjected to the new duties was unclear.
US officials demand that any agreement have teeth and US Trade Representative Robert Lighthizer has said tariffs offer crucial leverage should Beijing backslide on its commitments.
Gary Clyde Hufbauer, a former US trade official and senior fellow at the Peterson Institute for International Economics, said that lifting the tariffs too early could encourage criticism from Democrats that he had gone soft in the negotiations.
“The White House response to this drama is to keep the tariffs and only to slowly lower the rate as the Chinese fulfill their commitments,” Hufbauer told AFP.
“The Chinese strategy is to have them get rid of it,” he said. “My guess is that something in between will be in the compromise.”
In February, Trump announced he would complete any deal himself at a “signing summit” with Xi later in March but the date has repeatedly slipped further into the year as the two sides continued to haggle.
Optimism about a deal has helped boost global stock markets for much of the start of 2019, with investors seemingly less concerned about the contents of any deal than the mere fact that the world’s two top economies could soon end their skirmishes.
Analysts say any agreement is likely to include banner announcements that China has agreed to increase purchases of American commodities like soybeans and fuel.
This could perversely serve to give Chinese state enterprises a greater market role while making US exporters more reliant on the Chinese government’s purchasing decisions — both possibly contrary to US objectives and interests.
William Reinsch, a trade expert at the Center for Strategic and International Studies and former Commerce Department official for exports, pointed to Beijing’s boycott of US soybean exports last year.
American producers could struggle to fill major new orders announced by Beijing, he said.
“The only way they can buy every bean is if we stop selling to everybody else and that puts us in an enormous position of vulnerability,” he said.