President Donald Trump and Chinese President Xi Jinping are both facing intense domestic pressure to de-escalate the trade war between their countries as they prepare to meet on Saturday in Japan.
Trump needsChina to make vast structural changes to its economy while also buying more U.S. farm and manufactured goods. Xi needs Trump to lift the tariffs he has put on Chinese imports. With the economic strain mounting on both sides, the two are widely expected to use the G-20 summit in Osaka as an opportunity to start talking again after negotiations broke off abruptly in May
In one sign of a thaw, Robert Lighthizer and Chinese Vice Premier Liu He spoke by phone on Monday. Lighthizer and Treasury Secretary Steven Mnuchin are expected to meet with their Chinese counterparts in Osaka before Trump and Xi meet.
“President Trump likes deals, so he might agree to something,” said Matthew Goodman, a former White House international economics adviser during the Obama administration, who now is at the Center for Strategic and International Studies. “More likely is that they will agree to a truce, and to restart talks, and in a time-limited way, try to come to some sort of deal within three months, let’s say.” In a briefing call with reporters on Monday, a senior administration official said Trump is “comfortable with any outcome” of the meeting with Xi because the U.S. is in a strong position. But Trump’s trade war is facing mounting criticism at home. The U.S. government has collected billions of dollars of additional tariff revenue, but that barely has made a dent in the nation’s skyrocketing budget deficit as a result of Trump’s tax cuts and increased federal spending. Farmers are hurting, with farm exports to China projected to plunge to $6 billion this year from $26 billion during the Obama administration. And U.S. retailers including Walmart and Macy’s are warning of price hikes if Trump moves forward with a plan to impose a 25 percent tax on almost all remaining Chinese goods. “I think Trump has painted himself into a corner on this,” said Bill Reinsch, a trade policy expert at the Center for Strategic and International Studies. Since China is unlikely to make the sort of sweeping reforms the administration is demanding, “eventually Trump is going to figure out his choice is between a weak agreement and escalating the trade war.” Xi is not under the same reelection pressure as the leader of a country with a long history of authoritarian rulers, Reinsch said. “It’s not a market economy. I think they can outlast us,” Reinsch said. Chinese officials on Monday stressed the need for both sides to compromise. “We should meet each other halfway, which means that both sides will need to compromise and make concessions, and not just one side,” Wang Shouwen, China’s vice minister of Commerce and a top deputy on the negotiating team, said during a press briefing. (www.politico.com)
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