China Is Counting On Trump-Xi Meeting to Settle Trade Fight

The invite comes as Mr. Liu delivered a package of modest concessions for the trade talks that started Wednesday, the people said. It includes more Chinese purchases of U.S. farm and energy products and promises to invite more American capital into the manufacturing and financial-services sectors.

But the offer falls short of what Washington has been asking for, which includes deeper changes in what it calls Beijing’s protectionist industrial policies that hamstring U.S. competitors. The two sides are still far from a deal, and they aren’t expected to agree today to a written framework with blanks left for areas where there is disagreement—the kind of document that is standard in trade negotiations.

“We are in the fifth inning of a nine-inning game,” said Mr. Brilliant. “The president sees this as an historic opportunity, but the question is whether the administration can deliver on a comprehensive deal with the Chinese.” The U.S. Chamber, along with many business groups, have been pushing the White House not to settle too easily with the Chinese and to insist on significant changes in Chinese industrial and technology policies.

.. By agreeing to a meeting, some of Mr. Trump’s advisers believe the president is putting himself in a position where he will face enormous pressure not to escalate tariffs on Chinese goods from 10% now to 25% on March 2, as he has threatened. That’s because the build-up for the meeting—and the expectations of a deal—will be so high that a negative outcome would tank markets globally and batter both economies.

That is especially the case if the two leaders were to meet in China, as Chinese officials want. A decision then to raise tariffs would be a slap in the face for the Chinese leader, whom Mr. Trump regularly refers to as a friend. Instead, the pressure would be on the U.S. to reduce tariffs.

..  even keeping the current 10% tariffs in place “would be hard for Xi Jinping to accept.”

.. At the same time, Beijing is also unlikely to accept U.S. demands to remake its industrial policy and scale back the role of the state in the economy, said Cornell University China expert Eswar Prasad.

.. “The more likely scenario is a deal where Trump declares victory, which is relatively modest in scope, and the two sides de-escalate tension and continue discussions on complicated issues left unresolved,” said Mr. Prasad, who speaks regularly with Chinese officials.

 

As China Talks Begin, Trump’s Trade Negotiator Tries to Keep President From Wavering

WASHINGTON — In the middle of his crowded dinner in Buenos Aires with President Xi Jinping of China, President Trump leaned across the table, pointed to Robert Lighthizer, the United States trade representative whose skepticism of China runs deep, and declared, “That’s my negotiator!

He then turned to Peter Navarro, his even more hawkish trade adviser, adding, “And that’s my tough guy!” according to aides with knowledge of the exchange.

Now, with talks between China and the United States set to begin this week in Beijing, Mr. Lighthizer, aided by Mr. Navarro, faces the assignment of a lifetime: redefining the trade relationship between the world’s two largest economies by Mr. Trump’s March 2 deadline to reach an agreement.

And he must do it in a way that tilts the balance of power toward the United States. His approach will have significant ramifications for American companies, workers and consumers whose fortunes, whether Mr. Trump likes it or not, are increasingly tied to China.

First, however, Mr. Lighthizer will need to keep a mercurial president from wavering in the face of queasy financial markets, which have suffered their steepest annual decline since 2008. Despite his declaration that trade wars are “easy to win” and his recent boast that he is a “Tariff Man,” Mr. Trump is increasingly eager to reach a deal that will help calm the markets, which he views as a political electrocardiogram of his presidency.

Mr. Trump has repeatedly told his advisers that Mr. Xi is someone with whom he can cut a big deal, according to people who have spoken with the president. On Saturday, Mr. Trump called Mr. Xi to discuss the status of talks, tweeting afterward that good progress was being made. “Deal is moving along very well,” Mr. Trump said.

The administration has tried to force China to change its ways with stiff tariffs on $250 billion worth of Chinese products, restrictions on Chinese investment in the United States and threats of additional levies on another $267 billion worth of goods. China has responded with its own tit-for-tat tariffs on American goods. But over a steak dinner during the Group of 20 summit meeting in Argentina, Mr. Xi and Mr. Trump agreed to a 90-day truce and to work toward an agreement that Mr. Trump said could lead to “one of the largest deals ever made.”

Mr. Lighthizer — whose top deputy will meet with Chinese officials this week ahead of more high-level talks in February — has played down any differences with Mr. Trump and views his role as ultimately executing the directive of his boss. But the trade representative, who declined to be interviewed, has told friends and associates that he is intent on preventing the president from being talked into accepting “empty promises” like temporary increases in soybean or beef purchases.

Mr. Lighthizer, 71, is pushing for substantive changes, such as forcing China to end its practice of requiring American companies to hand over valuable technology as a condition of doing business there. But after 40 years of dealing with China and watching it dangle promises that do not materialize, Mr. Lighthizer remains deeply skeptical of Beijing and has warned Mr. Trump that the United States may need to exert more pressure through additional tariffs in order to win true concessions.

When Mr. Lighthizer senses that anyone — even Mr. Trump — might be going a little soft on China, he opens a paper-clipped manila folder he totes around and brandishes a single-page, easy-reading chart that lists decades of failed trade negotiations with Beijing, according to administration officials.

Bob’s attitude toward China is very simple. He wants them to surrender,” said William A. Reinsch, a former federal trade official who met him three decades ago when Mr. Lighthizer was a young aide for former Senator Bob Dole of Kansas. “His negotiating strategy is simple too. He basically gives them a list of things he wants them to do and says, ‘Fix it now.’

Mr. Trump’s selection of Mr. Lighthizer last month to lead the talks initially spooked markets, which viewed the China skeptic’s appointment as an ominous sign. It also annoyed Chinese officials, who had been talking with the Treasury secretary, Steven Mnuchin, a more moderate voice on trade and the primary point of contact for Liu He, China’s top trade negotiator. Mr. Mnuchin has urged the president to avoid a protracted trade war, even if that entails reaching an interim agreement that leaves some issues unresolved.

Mr. Mnuchin, who attended the G-20 dinner, helped Mr. Trump craft an upbeat assessment declaring the Buenos Aires meeting “highly successful” in the presidential limousine back to the airport, according to a senior administration official.

The disparate views among Mr. Trump’s top trade advisers have prompted sparring — both publicly and behind the scenes.

During an Oval Office meeting with the trade team the fall of 2017, Mr. Lighthizer accused Mr. Mnuchin and Gary D. Cohn, the former National Economic Council director, of bad-mouthing him to free-trade Republican senators.

The argument grew so heated that the White House chief of staff, John F. Kelly, quickly pulled the combatants into the nearby Roosevelt Room and away from the president, where the argument raged on for a few more minutes, according to two witnesses.

Emily Davis, a spokeswoman for the United States trade representative, disputed the account.

Mr. Lighthizer has since worked to increase his own face time with Mr. Trump. He has joked to colleagues that he has more influence with Mr. Trump during winter months because he is able to hitch a ride on Air Force One during the president’s flights down to Mar-a-Lago, which is several miles from Mr. Lighthizer’s own $2.3 million waterfront condo in Palm Beach, Fla.

He used that access to argue to Mr. Trump that the United States has never had more leverage to extract structural reforms on intellectual property, forced transfer of technology from American companies and cybercrime. But while Mr. Trump has jumped at the chance to claim victory in changing China’s ways, experts say that what Mr. Lighthizer is demanding would require significant shifts in how Beijing’s central government and its manufacturing sector coordinate their activities, and that might simply not be possible in the short term.

“Good luck with that,” Mr. Scissors said.

Those who know Mr. Lighthizer say he will try to force concessions through a combination of pressure tactics, like tariffs, and public condemnation. Mr. Lighthizer — who described his own negotiating style as “knowing where the leverage is” during a 1984 interview — typically presents few specific demands during initial talks while publicly bashing efforts by the other side.

He used that approach during recent talks with Canada and Mexico to revise the North American Free Trade Agreement, criticizing foreign counterparts as intransigent and characterizing complaints by American businesses as pure greed.

Mr. Lighthizer’s unsparing view of China comes, in part, from his childhood in Ashtabula, Ohio, an industrial and shipping town on the Great Lakes hit by the offshoring of steel and chemical production. For much of his career, Mr. Lighthizer was a lonely protectionist voice in a Republican Party dominated by free traders, alternating between jobs in government and a lucrative private law career representing large American corporations like United States Steel in trade cases against China.

Mr. Lighthizer found his way into Mr. Trump’s orbit through his work in the steel industry, where he gained prominence by filing lawsuits accusing Japan and China of dumping metals into the United States, in violation of trade laws. In 2011, Mr. Lighthizer caught Mr. Trump’s eye with an opinion piece in The Washington Times, in which he defended Mr. Trump’s approach to China as consistent with conservative ideology and compared the future president to Republican icons like Ronald Reagan.

Taciturn in public and self-deprecating in private, Mr. Lighthizer sees himself as a serious player on the world stage: Two recent guests to Mr. Lighthizer’s Georgetown townhouse were greeted by the stern visage of their host staring down at them from an oil portrait on the wall.

The trade adviser is guarded around Mr. Trump, often waiting until the end of meetings to make his points and quietly nudging the president away from actions he views as counterproductive, current and former officials said. That was the case in mid-2017 when he cautioned the president against withdrawing unilaterally from the World Trade Organization, adding for emphasis, “And I hate the W.T.O. as much as anybody.”

He does not always get his way. In the wake of a new trade agreement with Mexico and Canada this fall, Mr. Lighthizer urged Mr. Trump to consider easing steel and aluminum tariffs on those countries and replacing them with less burdensome quotas. Mr. Trump rejected his plan, according to negotiators from all three countries.

A poker-faced Mr. Lighthizer broke the news to his Mexican and Canadian counterparts by declaring the proposal was inoperative, one of the officials said.

The president also ignored Mr. Lighthizer’s advice in early December when he announced that he intended to begin the six-month process of withdrawing the United States from Nafta in order to pressure House Democrats into passing the new United States-Mexico-Canada Agreement.

That threat undermined months of quiet negotiations between Mr. Lighthizer, labor groups and Democrats like Senator Sherrod Brown of Ohio and Representative Nancy Pelosi of California to try to win their support for the new trade deal. Mr. Trump has yet to follow through on his threat, and Mr. Lighthizer continues trying to work with Democrats to get the new trade deal approved.

Bob is trying to provide stability and focus in a completely chaotic environment,” Mr. Brown said. “I can’t speak for Bob, but I am certain he is frustrated. How could you not be frustrated as the U.S. trade representative for a president who knows what his gut thinks but hasn’t put much of his brains into trade?

 

The trade war is already over

The Chinese and U.S. economies are likely to slow in 2019, giving President Donald Trump and Chinese President Xi Jinping no choice but to declare a truce in their ferocious trade battle, according to a top Wall Street strategist.

“I think personally that the trade war is coming to an end and there is really nothing Trump can do about it,” Jim Paulsen, chief investment strategist at The Leuthold Group, said in the latest edition of the POLITICO Money podcast. “If you have the United States and China both with very weak economies, the negotiation around trade just evaporates. Neither party has any negotiating power left. They both have to stop what they are doing.”

.. Paulsen said he doesn’t believe that Trump, who loves to extol a rising market, will want to risk the kind of crash that could occur if talks fall apart. “I think fairly soon we are going to see an announcement between China and Trump,” he said. “I think it will amount, basically, to a hill of beans. But it will be a face-saving announcement of something being done.”

More broadly, Paulsen said he thought recent market volatility and sharp declines were actually a good thing. He said he believes investors are panicking about a global recession that isn’t actually coming: “One of the good things we’ve got going on, I would say, as an investor, is we’ve got people freaking out. I think that’s a good thing.”

‘I Am a Tariff Man’

It’s a bird, it’s a plane. No, it’s the President of the United States.

Trump officials continue to express optimism about the commitments that the Chinese made, and what they call a new seriousness from Mr. Xi and his chief economic adviser, Liu He. That is consistent with the message that recent U.S. visitors in private business have told us that they have also heard in Beijing.

But Chinese officials have been notably quiet and unspecific since the weekend about the commitments they made in Argentina. They haven’t even confirmed the 90-day negotiating deadline that Trump officials have stressed. In other words, who’s on first?

Then on Tuesday Mr. Trump belly-flopped into the debate, as he is wont to do. In a Twitter barrage, the President expressed optimism about his weekend meeting and the chances of a deal. But he added that “remember . . . I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power.” All that was missing was a leotard with a T on the chest and a cape.

Markets apparently didn’t see the super hero humor and promptly sold off. Perhaps they know that tariffs are taxes on commerce, and when you tax something you get less of it. Mr. T’s unveiling also hit on the day after the yield curve on some Treasurys began to invert—which can mean trouble. The economy is still strong enough to survive some uncertainty, but Tariff Man shouldn’t go to war with the laws of economics. He’ll lose.

Nicholas Kristof: President Trump, a bull in a China shop

I’m increasingly concerned that the U.S. and China are heading for a collision. At a time when the global economy and world stock markets are fragile, this would be bad for everybody. I do think there is a reasonable chance that Presidents Trump and Xi Jinping will hammer out some kind of a tentative deal at their G20 meeting in two weeks, but I fear that may be only a temporary ceasefire and that the longer term trends are likely to lead to more friction.
One basic problem is that Trump and Xi are a bit alike: Both are overconfident, impetuous authoritarian nationalists who disregard human rights. Hence the symmetry of two freight trains colliding, the topic of my column on the long run souring toward China and the dangers ahead. Here’s what you should watch out for.
.. I’m still gnashing my teeth at the “caravan hoax” pulled by President Trump to scare voters into supporting GOP candidates in the midterms, and I think too many news organizations were too credulous in covering the story without sufficient context and fact-checking. We in the media shouldn’t allow ourselves to become a channel for fear-mongering and demonization. And now it looks as if the U.S. may spend $200 million pointlessly keeping U.S. troops in the desert near the border, away from their families over Thanksgiving, as a forgotten prop for the midterms. Meanwhile, we can’t afford effective treatment for 90 percent of people with drug addictions, and we can’t afford to reduce lead exposures that damage the brains of more than half a million American kids each year. Grrrrrr.
Saudi Arabia has changed its story again on the murder of Jamal Khashoggi, pinning it on some fall guys but protecting the crown prince. And the U.S. seems happy to buy into that cover-up. Indeed, NBC reports that the U.S. is considering deporting a Turkish dissident cleric (something Turkey very much wants) as a kind of bribe to get Turkey to keep quiet about the torture, murder and dismemberment of Jamal. What the Trump administration doesn’t seem to appreciate is that the crown prince is not a force for stability in the Middle East, but for instability (as we’ve seen in the mess he’s made with Yemen, Qatar and Lebanon). Check out this extraordinary video reconstruction of the murder of Jamal and subsequent cover-up.