Trump Delays a Tariff Deadline, Citing Progress in China Trade Talks
WASHINGTON — President Trump delayed his own deadline to increase tariffs on Chinese goods on Sunday as his administration continues a monthslong effort to persuade Beijing to make significant structural changes to its economy that have so far proved elusive.
Mr. Trump, in a tweet on Sunday, said he would delay a Friday deadline to increase tariffs on $200 billion in Chinese imports, citing “substantial progress” during a week of trade talks in Washington between American and Chinese officials.
The president, who has been eager to cut a deal with Beijing, said the United States and China had forged a compromise on key issues, including China’s requirement that American companies hand over valuable intellectual property and technology as a condition of doing business in China, as well as more purchases of American agriculture products.
But in a sign of how fluid the talks remain, the two sides did not sign an official agreement and Mr. Trump said he hoped to sign a final deal in person in a meeting with President Xi Jinping of China, most likely in March.
“As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1,” Mr. Trump wrote. “Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”
The extension will prevent the United States from increasing tariffs on $200 billion of Chinese exports to 25 percent from 10 percent on March 2. It is likely to calm volatile financial markets and reassure business owners who depend on China both for components and as a market for finished goods.
But while some analysts said Mr. Trump’s advisers appeared likely to secure greater concessions than past administrations have been able to achieve, others remain skeptical about the ability of the United States to significantly transform the economic relationship with China.
The agreement to keep talking and pause tariff increases followed days of negotiations in which American and Chinese officials met in board rooms near the White House to work line-by-line through a handful of documents covering intellectual property, services and subsidies. The Chinese were ready to commit to billions of dollars of purchases of American soybeans, beef, natural gas and other products, though they have been more hesitant to make structural changes to their economy.
Mr. Trump has long criticized China for undercutting American workers, and his advisers have tried to pressure the country into making firm commitments to protect American intellectual property, give foreign companies equal access to Chinese markets and reduce subsidies to state-owned firms. But some of these goals run counter to China’s own ambitions of cementing the Communist Party’s control over the economy and the economic dominance of its state-owned firms.
One component of this week’s agreement was a pledge by China not to artificially weaken the value of its heavily managed currency, according to people with knowledge of the negotiations. A weaker currency would make Chinese products cheaper abroad and lessen the impact of American tariffs. Under the agreement reached this week, the Chinese must notify the United States when and why they are intervening in their currency. If they violate the agreement, the Trump administration would ratchet up tariffs on Chinese goods, according to one person with knowledge of the negotiations.
Brad Setser, a senior fellow for international economics at the Council on Foreign Relations, said the currency commitment made sense in light of the Trump administration’s goal of lowering the gap between what the United States sells to China and what it imports. That so-called trade deficit in goods totaled $382 billion in 2018.
“I don’t see how you can credibly try to bring the bilateral deficit down if China doesn’t make a commitment to resist further depreciation,” Mr. Setser said. “A weaker yuan encourages U.S. firms to import more from China, it makes U.S. exports in China more extensive, and this would work against the administration’s goal of a more balanced trading relationship.”
As the Chinese negotiators prepared to return to Beijing on Monday, industry representatives were struggling to understand the status of the talks and evaluate the effect on their businesses.
Business owners and lobbyists have generally agreed with some of the administration’s goals, including fighting for more equal treatment for foreign companies operating in China. But they have disagreed with the use of tariffs as leverage — since that tends to hurt American importers and their customers — and Mr. Trump’s focus on the bilateral trade deficit.
While the United States and China seem nearer to an agreement than in previous months, companies that operate in China have not been released from uncertainty. Mr. Trump views trade as one of his signature issues, and his advisers say that, when it comes to a final deal, the president will be the one to decide if it passes muster.
Mr. Trump has often weighed in at the last minute to change the terms in past negotiations, imposing tariffs or lifting sanctions based on personal conversations with foreign leaders or perceived compliments or slights.
“The president has undercut, privately or publicly, every one of his trade representatives,” said William Reinsch, a former United States trade official and now a senior adviser at the Center for Strategic and International Studies. “The president is his own trade representative and he’s going to make the decisions.”
In the Oval Office on Friday, Mr. Trump contradicted his top trade adviser in front of rolling TV cameras about whether the agreement should be termed a “memorandum of understanding,” a phrase Mr. Trump said was not forceful enough.
Still, the president was upbeat. Mr. Trump in a tweet called the talks “very productive.”
The fate of Huawei, a Chinese telecom company that has been charged with violating American sanctions, remains another variable in the talks. The administration has prepared an executive order that would curtail the company’s operations in the United States, but has yet to issue it. While trade negotiators were not discussing the company as part of their detailed negotiations, Mr. Trump on Friday indicated that the company’s fate might ultimately be determined as part of any pact.
Further complicating matters, the Chinese have also assisted the Trump administration in arranging a summit with North Korea this week.
“President Xi of China has been very helpful in his support of my meeting with Kim Jong Un,” Mr. Trump tweeted on Sunday. “The last thing China wants are large scale nuclear weapons right next door. Sanctions placed on the border by China and Russia have been very helpful. Great relationship with Chairman Kim!”
Get politics and Washington news updates via Facebook, Twitter and the Morning Briefing newsletter.
Source: Read Full Article