Jan 18, 2019 - Economy

U.S.-China trade talks could be inching toward progress

Illustration of China and U.S. shipping containers

Illustration: Lazaro Gamio/Axios

There appears to be some movement in the trade negotiations between the U.S. and China.

What's happening: The Chinese side confirmed earlier this week that Vice Premier Liu He will come to Washington, D.C., on Jan. 30–31. Commerce Vice Minister Wang Shouwen and Finance Vice Minister Liao Min will travel to D.C. next week, the Wall Street Journal reported Thursday.

That same WSJ story also excited markets by reporting...

U.S. officials are debating ratcheting back tariffs on Chinese imports as a way to calm markets and give Beijing an incentive to make deeper concessions in a trade battle that has rattled global economies.
The idea of lifting some or all tariffs was proposed by Treasury Secretary Steven Mnuchin in a series of strategy meetings, according to people close to internal deliberations. They say the aim is to advance trade talks and win China’s support for longer-term reforms.

My thought bubble: Officials denied the report, but it jibes with what I have been hearing about continuing dissension within the U.S. side and an overall softening in the quest to get a deal. But preemptively backing down would be a signal of eagerness to Beijing.

The revelation that Jared Kushner is involved in the China negotiations is a very interesting part of that WSJ story:

Presidential adviser Jared Kushner has indicated some sympathy for lifting at least some tariffs, say those tracking the talks, but not on the scale of Mr. Mnuchin.

Meanwhile, the Chinese are offering to ramp up purchases of U.S. goods to reduce the trade deficit to zero by 2024, Bloomberg reported Friday morning.

  • Quick take: Trump, as we know, is all about the trade deficit, and it is much easier for the Chinese to buy their way into a cease fire while avoiding any of the difficult structural reforms the U.S. has demanded.

The bottom line: As I wrote last week, I expect that the Chinese offer will fall far short of what U.S. Trade Representative Robert Lighthizer wants, but using a mixture of big purchase commitments, unofficial lobbying, flattery, and headline concessions will ultimately prove enough for Trump.

The big question: Will the Chinese put the possible extradition from Canada of Huawei CFO Meng Wanzhou on the table as a last-minute ask to close the deal?

Go deeper: The U.S. and China Are Hatching a Plan to Reopen Chicken Trade (WSJ)

Go deeper