Trump Officials Offer Mixed Signals on Trade Deal With China

Source: By Alan Rappeport and Ana Swanson, New York Times • Posted: Friday, March 1, 2019

President Trump met with top United States and Chinese trade officials in the Oval Office last week. Liu He, China’s vice premier, and Robert Lighthizer, the United States trade representative, are trying to reach agreement on the terms of a trade deal.Carlos Barria/Reuters

WASHINGTON — President Trump and his top economic advisers have sent a series of conflicting messages about the status of trade talks with China: A deal is either imminent, still out of reach or somewhere in between.

Or, as Mr. Trump suggested on Thursday, “We are well on our way to doing something special” with China or the United States could decide to “walk from a deal.”

The Trump administration this week halted plans to raise tariffs on $200 billion of Chinese imports as the two countries try to agree on terms that would end a monthslong trade war between the world’s two largest economies. The move was seen as a good-will gesture by Mr. Trump, who is eager to reach an agreement and has begun talking about a signing meeting with President Xi Jinping of China, perhaps in late March, at the president’s Florida resort.

“I think we’re heading for a historic deal,” Larry Kudlow, director of the National Economic Council, said in an interview on CNBC on Thursday. “The outlook for a deal is very positive.”

But other top advisers, including Mr. Trump’s chief negotiator, have played down the prospect for a deal, outlining a tough road ahead as the United States tries to secure lasting promises from the Chinese.

Steven Mnuchin, the Treasury secretary, said on CNBC that the United States and China were working off a 150-page document and that he hoped enough progress could be made so that the two presidents could appear at a summit meeting.

“This is a very, very detailed agreement for some very significant commitments,” said Mr. Mnuchin, who was traveling in London. “And these are structural commitments, but we still have more work to do.”

Robert Lighthizer, Mr. Trump’s top trade negotiator, was decidedly more cautious on Wednesday, saying both sides were making “real progress,” but it was still an open question as to whether an enforceable deal could be reached.

“Let me be clear: Much still needs to be done both before an agreement is reached and, more important, after it is reached, if one is reached,” he told House lawmakers during a Ways and Means Committee hearing.

The Trump administration has been trying to put a positive spin on the talks, in part to help mollify jittery investors who have sent financial markets tumbling in response to any signs of negative news on the trade front. Mr. Trump has publicly claimed that the tariffs have been helpful to the United States economy, but most economists say the tariffs are a drag on growth. Big multinational companies have begun attributing weaker profits to the trade dispute and the tariffs are beginning to affect consumer prices in the United States, according to data from the Federal Reserve Bank of San Francisco.

A report released this week by the Institute for International Finance found that China’s retaliatory tariffs on American goods have more than offset Mr. Trump’s tariffs. China’s tariffs have depressed United States exports, causing America’s trade deficit with China to expand last year. The biggest beneficiaries from the trade war, according to the report, are Brazil and Russia, which have increased both exports and imports with China.

Mr. Kudlow acknowledged that the talks had not been seamless, including last week, when a delegation of Chinese officials came to Washington to try to hash out details. He said that the second day of midlevel negotiations was canceled because of a lack of progress. Mr. Lighthizer, Mr. Trump’s top negotiator, “read them the riot act” to get things moving, Mr. Kudlow said.

The Port of Long Beach in California. China’s tariffs have depressed United States exports, causing America’s trade deficit with China to expand last year.Mark Ralston/Agence France-Presse — Getty Images

The Port of Long Beach in California. China’s tariffs have depressed United States exports, causing America’s trade deficit with China to expand last year.Mark Ralston/Agence France-Presse — Getty Images

He added that progress has been made on the “structural” changes that the United States wants China to make, but he suggested it is now up to Mr. Xi to finalize the terms of an agreement.

People familiar with the negotiations, who declined to be named because the talks were not public, said the Chinese had made offers to strengthen their laws around patents and copyrights, open their markets to foreign financial services firms and carmakers and bolster laws around the coerced transfer of technology.

But the Chinese have not made substantive commitments to overhaul state-owned enterprises, stop cybertheft or relax their tight restrictions on the movement of data that hamstring foreign technology firms, they said.

Derek Scissors, a resident scholar at the American Enterprise Institute, said Mr. Lighthizer had clearly been working hard to improve Chinese behavior in a substantive sense. “But have we moved the bar since the beginning of the Trump administration? The answer is no,” he said.

“We don’t look at all close to meaningful enforced provisions on intellectual property,” Mr. Scissors said. “We are nowhere close to a good deal.”

Mr. Lighthizer defended his progress on the structural issues on Wednesday, but he cautioned that “there’s no agreement on anything until there is an agreement on everything.”

Mr. Mnuchin played down any disagreements among Mr. Trump’s economic team, proclaiming that everyone had a “common vision” for an agreement.

There are also looming questions about how any deal would be enforced. Mr. Lighthizer said Wednesday that the Chinese had agreed to periodic meetings at the levels of office director, vice minister and minister that would allow the United States to keep tabs on China’s behavior and air complaints from companies about unfair business practices. If China fails to keep its agreement, the United States would respond “proportionally but unilaterally.”

But enforcement remains a sticky subject among China’s leaders. Details remain scarce about how such complaints would be adjudicated and whether China would agree to an arrangement that would force it to accept punishment from the United States without recourse.

Trump administration officials have supported a unilateral enforcement mechanism that would make the United States the sole judge of China’s behavior. They do not appear to be considering a mechanism that would refer violations to the World Trade Organization, which Mr. Trump and Mr. Lighthizer have fiercely criticized for treating the United States unfairly.

Some White House officials privately expressed frustration on Thursday following comments made by Cui Tiankai, the Chinese ambassador to the United States, to TheSouth China Morning Post. Mr. Cui said that some of the changes that the United States was asking the Chinese to make would take five to 10 years to accomplish.

The fallout from the latest round of negotiations with North Korea over its nuclear program also represents a new wild card. In the past, Mr. Trump has expressed frustration with China when problems with North Korea arose and the collapse of negotiations this week could exacerbate that.

During a news conference in Vietnam on Thursday, after walking away from an agreement with North Korea, Mr. Trump said that he was also prepared to walk away from the China talks if necessary.

“I mean, I am always prepared to walk. I’m never afraid to walk from a deal,” he said. “And I would do that with China, too, if it didn’t work out.”

A version of this article appears in print on , on Page B3 of the New York edition with the headline: Outlook for China Deal? ‘Very Positive’ or ‘Nowhere Close’. Order Reprints | Today’s Paper | Subscribe