President Trump on Sunday again put off a self-imposed deadline for raising tariffs on Chinese imported goods, saying negotiators for the United States and China made “substantial progress” in trade talks over the weekend.
The move by Trump to back away from a significant escalation in tariffs could be a sign that he may be preparing to end his months-long trade war with China. At a minimum, it clears the way for further negotiations and a possible face-to-face meeting with Chinese President Xi Jinping next month, for the two leaders to wrap up a deal.
“As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1,” Trump tweeted Sunday evening. “Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”
“If all works well, we're going to have some very big news over the next week or two,” Trump later told the nation’s governors as he hosted a black-tie dinner for them at the White House. “We still have a little ways to go,” he added moments later.
Trump’s announcement on Twitter came after U.S. negotiators held extended talks through the weekend with a senior-level delegation from China that arrived in Washington last week for the latest in a series of meetings in both countries. On Friday in the Oval Office, with top U.S. and Chinese trade officials looking on, Trump had said that he and Xi would probably have to meet at his Florida resort to work out the final issues.
Trump tweeted that the United States had made “substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.”
But he provided no details of what had been tentatively agreed to on those complex issues that have bedeviled U.S.-China trade relations for decades.
Some analysts questioned whether Trump had any intention of stepping up pressure on the Chinese by raising tariffs March 1, given the president’s increasingly evident eagerness to cut a deal with China, even a weak one, after weeks of pressure from stock markets and from farmers and industries hit by China’s retaliatory tariffs.
Trump has continued to speak highly of Xi and of his good personal relationship with him. The two men last met Dec. 1 on the sidelines of the annual summit of the Group of 20, the world’s biggest economic powers, in Buenos Aires, where they called a 90-day truce in their trade conflict.
The president has been signaling for days that he might extend the deadline to ratchet up tariffs from the current 10% to 25% on $200 billion of Chinese goods. Trump initially threatened to raise the duties to that level Jan. 1 if no deal was reached by then, but he pushed the deadline to March 1 after meeting with Xi in December.
As many analysts see it, one factor for the delay is Trump’s consideration of the effect on financial markets. Trump does not want to risk a nosedive in stocks and damage to what has been a fairly solid U.S. economy.
Prospects for a resolution in the trade fight have lifted markets this year, after they tumbled at points last year in large part because of tit-for-tat tariffs and the threatened escalation in the trade war between the world’s two largest economies.
Another reason, experts said, is that Trump wants China’s help in dealing with the problem of North Korea’s nuclear missile program. Beijing is Pyongyang’s primary benefactor and has considerable sway over North Korean leader Kim Jong Un, whom Trump is scheduled to meet with in Vietnam this week. The president pushed for the meeting with Kim though their previous summit last summer has yet to yield substantial progress in halting Kim’s nuclear ambitions.
“The Chinese have known for weeks, if not months, that he would not hike tariffs further,” said Derek Scissors, a China expert at the conservative-leaning American Enterprise Institute.
Scissors was skeptical that the Trump administration would end up with a strong trade deal that would have an enforcement mechanism to ensure that Beijing lives up to its commitments.
U.S. Trade Representative Robert Lighthizer, whom Trump appointed to lead the China talks for the U.S. side, has insisted that Beijing must make structural changes to its state-run economy, including opening up markets, doing away with subsidies to domestic companies and ending practices that essentially force U.S. companies to hand over their intellectual property.
The announcement is “clearly a sign [Trump] wants to reach an agreement,” said William Reinsch, a veteran trade analyst and senior advisor at the Center for Strategic and International Studies in Washington. Although progress in the talks is certainly possible, Reinsch said, “The interesting possibility that is developing is that Trump will agree to something that, objectively speaking, is not very good.”
Reinsch added of Lighthizer, “The biggest thing he has to worry about is that he’ll be sold out by his own president rather than the Chinese.”
Lighthizer is scheduled to testify before Congress on Wednesday, and it's likely that he will face tough questioning from lawmakers in both parties.
Many Democrats, newly empowered by their control of the House, will press Lighthizer for details and insist on strong enforcement provisions, just as they have been demanding of the administration’s renegotiated North American Free Trade Agreement, which must be ratified by Congress.
On the Republican side, some lawmakers as well as their business constituents have urged the Trump administration to extract meaningful concessions from China, even as they have criticized the president’s rampant use of tariffs.
Sen. Patrick Toomey, a Republican from Pennsylvania, tweeted Sunday that he was encouraged by Trump’s announcement: “Hopefully this leads to an agreement that stops China’s theft of U.S. intellectual property and avoids a full-blown trade war.”
Experts said they were not surprised that Trump had pulled back from the March 1 deadline to impose stiffer tariffs, having done so twice already. He did not say how long he was extending it this time.
“When you kicked the can down the road twice, expectations are that you’re going to do it again,” said David Loevinger, a managing director at TCW Emerging Markets Group in Los Angeles and a former senior Treasury Department official for China affairs.