Donald Trump’s top economic adviser sought to contain the fallout from the escalation of trade tensions with Beijing, saying there was a “strong possibility” the US president would meet with Xi Jinping, China’s president, to rescue a deal at the G20 summit in Japan next month.
Larry Kudlow, the director of the National Economic Council, raised the prospect of a face-to-face encounter between Mr Trump and Mr Xi as the US moved to impose sharply higher tariffs on billions of dollars of Chinese imports, dramatically raising the stakes in the trade dispute between the countries.
On Monday, the US administration is expected to release details of a further $300 billion of Chinese imports that it wants to hit with 25 per cent tariffs if there is no progress in the negotiations with Beijing, after already moving to raise levies on an earlier list of $200bn of Chinese goods from 10 per cent to 25 per cent on Friday.
New concerns
The higher US tariffs, which are expected to meet Chinese retaliation, have rattled financial markets and raised new concerns about the global economic outlook.
“We don’t think the Chinese have come far enough. We will wait and see. The talks will continue,” Mr Kudlow said. “And I will say this, the G20 meeting in Japan toward the end of June next month, the chances that president Trump and president Xi will get together at that meeting are probably pretty good,” he added.
Before then, no formal negotiations have been scheduled. But Mr Kudlow said that Chinese officials had invited Robert Lighthizer, the US trade representative, and Steven Mnuchin, the US treasury secretary, to Beijing for further talks.
The US and China were close to a deal to end their trade dispute just 10 days ago. But Washington accused Beijing of “reneging” on its commitments and watering down the agreement so it would be harder to enforce. Liu He, China’s vice-premier, who is leading the talks on the Chinese side, denied that claim.
“We believe that before an agreement is reached, any change is very natural,” Mr Liu said, according to Hong Kong-based Phoenix Media. “We did not backtrack. We had disagreements over how to write some of the text is all.”
Taunted
China wants a deal “premised on equality and dignity”, Mr Liu said, adding that the remaining differences were “matters of principle” over which China could not make concessions. On Saturday evening, however, Mr Trump taunted Beijing’s negotiators. “I think that China felt they were being beaten so badly in the recent negotiation that they might as well wait around for the next [US presidential] election, 2020, to see if they could get lucky and have a Democrat win,” the president said.
“The deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now.”
While Mr Trump has repeatedly claimed that China was paying the tariffs imposed by his administration – disregarding the fact that it is US importers who pay the duties – Mr Kudlow acknowledged that the escalation could bring some pain to American business, though he believed the scale would be minimal.
Aggressive turn
“Both sides will suffer on this,” Mr Kudlow said. “You’ve got to do what you got to do. We have had unfair trading practices all these years, and so in my judgment, the economic consequences are so small,” he added. But while many on Capitol Hill from both parties have backed Mr Trump’s aggressive turn in the China talks, others have grown concerned.
"The president is playing a negotiating battle with the Chinese and I think he feels that at this point they can't really back out," Rand Paul, the Republican senator from Kentucky, told ABC News on Sunday. "I...have advised the administration, get this done, because the longer we're involved in a tariff battle or a trade war, the better chance there is that we could actually enter into a recession because of it," he added.
The prospect of a new summit between Mr Xi and Mr Trump could signal that the US administration is more willing to compromise than the president’s bluster would suggest. – Copyright The Financial Times Limited 2019
