May 13, 2018

Trump's grand bargain on China

Illustration: Sam Jayne/Axios

President Trump wants a grand bargain with China. And hardliners in the Trump administration worry Treasury Secretary Steven Mnuchin is leading him down an accommodationist path that — in their minds — would betray the President's economic agenda and capitulate to Beijing.

The intrigue: Trump inflamed those internal fears today with this tweet that signaled he's willing to give away significant things for a deal: "President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!"

Why it matters: Trump campaigned on an aggressive anti-China, economic nationalist platform. But his most bellicose threats — which include tariffs on $150 billion worth of Chinese products — may never eventuate, as his chief economic advisor Larry Kudlow signaled when he took over from Gary Cohn. (I originally wrote to take Kudlow's assurances with a grain of salt. But they've aged better than my expectation of a trade war.)

  • Trump is making a potentially stunning concession with ZTE. The Chinese telecommunications giant is fighting for its life. It’s been sanctioned for doing business with Iran and North Korea, and the U.S. Commerce Department banned American companies from selling it their products.

Between the lines: Senior Treasury and National Economic Council officials — including Mnuchin and Larry Kudlow, who recently returned from Beijing — are optimistic that Trump may cut a deal with China in the coming weeks.

  • Sources familiar with Mnuchin's thinking tell me he wants a deal that would have the Chinese buy billions of dollars worth of U.S. products. The idea would be to cut the trade deficit — something Trump is obsessed with — but trade experts say that purchasing products isn't the way to deal with profound structural imbalances.
  • In exchange, the U.S. would drop the section 301 tariffs designed to stop China from stealing American intellectual property and getting its hands on U.S. technology for nefarious purposes.

What's next: Vice Premier Liu He, who has been leading China's trade talks with the Trump administration, plans to visit Washington this week or next. His team has been in town the past two days preparing for the meeting.

  • The administration hasn't planned for Liu He to meet with President Trump, but two sources familiar with the talks speculate that Trump may not be able to help himself — he'll likely want to take over the negotiations and meet with Liu He in the Oval.

Go deeper

World coronavirus updates: London mayor says U.K. nowhere near lockdown lifting

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

Prime Minister Jacinda Ardern offered hope in the fight against the novel coronavirus, saying she believes New Zealand has "turned a corner" after two weeks of strict lockdown measures. But London Mayor Sadiq Khan has said the U.K. is "nowhere near" lifting restrictions.

The big picture: COVID-19 has killed over 82,000 people and infected 1.4 million others globally as of early Wednesday, per Johns Hopkins data. Global recoveries have surpassed 301,000. Spain has reported the most cases outside the U.S. (more than 141,000) and Italy the most deaths (over 17,000). Half the planet's population is on lockdown.

Go deeperArrowUpdated 25 mins ago - Health

Wisconsin may be the start of the 2020 election wars

Illustration: Aïda Amer/Axios

Wisconsin voters braving lines in face masks — after a last-minute Supreme Court ruling against extending the absentee deadline — could foreshadow a nationwide legal struggle over how to conduct elections during the coronavirus outbreak, election experts say.

Why it matters: "It's a harbinger of what's to come in the next skirmishes in the voting wars" from now through November, Richard Hasen, a professor and national election law expert at the University of California, Irvine, told Axios.

New Zealand sets sights on coronavirus elimination after 2 weeks of lockdown

Prime Minister Jacinda Ardern gives a coronavirus media update at the New Zealand Parliament in Wellington. Photo: Mark Mitchell - Pool/Getty Images

AUCKLAND -- New Zealand has flattened the curve of novel coronavirus cases after two weeks of lockdown and the next phase is to "squash it," Professor Shaun Hendy, who heads a scientific body advising the government on COVID-19, told Axios.

Why it matters: The country imposed 14 days ago some of the toughest restrictions in the world in response to the pandemic, despite confirming only 102 cases and no deaths at the time.