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Trump says he will not meet Xi before trade deal deadline

Dow drops on fresh concerns that US, China won't be able to conclude trade agreement before US tariffs rise on March 2

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Mr Trump and Mr Xi at the G-20 Summit in Buenos Aires, on Dec 1, 2018. Trump administration officials have offered mixed signals and cautious optimism about how the negotiations have been going.

Washington

US PRESIDENT Donald Trump said on Thursday that he would not meet this month with President Xi Jinping of China, raising new concerns that the United States will not be able to complete a trade deal with China before American tariffs increase on March 2.

The decision not to meet before the deadline was a reversal for Mr Trump, who said last week that he planned to meet Mr Xi to resolve any "final issues" before a trade deal. Mr Trump, who made the comments during two days of negotiations between American and Chinese trade officials, suggested a face-to-face meeting could be combined with his trip to Asia in late February for a summit meeting with President Kim Jong Un of North Korea.

On Thursday, Mr Trump ruled out such a meeting before the March deadline. Asked by reporters if the meeting with Mr Xi would take place in the next month or so, Mr Trump said: "Maybe. Probably too soon." As to whether the two leaders would meet before the deadline, Mr Trump said, "no" and nodded his head.

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The US has threatened to increase tariffs on US$200 billion worth of Chinese goods to 25 per cent from 10 per cent if a deal is not reached by March 2.

Such an escalation would raise prices for companies and consumers on products imported from China and could incite additional retaliation from China, further ratcheting up a trade war that has already begun to inflict economic damage in both countries.

Both Mr Trump and his top trade negotiator, Robert Lighthizer, have said that the March 2 deadline is a firm date and that the US will not extend the timeline, which the two leaders agreed upon during a dinner in Buenos Aires, Argentina, last year.

But a senior administration official suggested on Thursday that, if talks continued to be constructive this month, it was possible that the president could change his mind and offer an extension.

The official, who spoke on the condition of anonymity, said it was also possible that a deal could be reached without both men meeting in person, with final details worked out by phone or video conference.

With talks moving quickly and many issues unresolved, it would be logistically difficult to arrange a presidential-level meeting on short notice, the official cautioned.

Still, it would be unlikely for an agreement of this magnitude, which Mr Trump has described as the largest deal in history, to be closed from afar.

"If there is no Trump-Xi meeting to announce the deal, its life expectancy is short," said Derek M. Scissors, a China expert at the American Enterprise Institute.

Stocks in the US fell sharply on Thursday after reports that Mr Trump and Mr Xi would not meet. Investors have been anxiously awaiting the end of the months-long trade dispute between the world's two largest economies.

The Dow Jones industrial average declined 220.77 points, or 0.87 per cent, while the S&P 500 index fell 25.56 points, or 0.94 per cent.

While Mr Trump's negotiators previously sought to play down expectations that a deal could be reached by March 2, trade analysts and China experts viewed the lack of a formal meeting between the two leaders as a bad sign.

It could also come as a surprise to the Chinese, given Mr Trump's friendly public meeting last week in the Oval Office with Liu He, China's vice-premier and top trade negotiator, who spent two days in discussions with Mr Lighthizer and Steven Mnuchin, the Treasury Secretary.

"This on-again, off-again meeting signals the enormous obstacles that still stand in the way of the two sides reaching even a partial deal by the early March deadline," said Eswar Prasad, the former head of the International Monetary Fund's China division.

"Trump's conciliatory statements during Liu He's recent visit to Washington generated a brief surge of optimism about prospects for a deal, but that has now dissipated as Trump and his administration again harden their public stance against China," he said.

Discussions are still continuing, and Mr Lighthizer and Mr Mnuchin will lead an American delegation to Beijing next week for more trade negotiations.

Mr Lighthizer briefed senators about the state of the negotiations on Wednesday.

According to a congressional aide, Mr Lighthizer was unable to offer specifics about how a deal with China would be enforced, including the administration's demand that the Chinese stop forcing American companies to hand over technology as a condition of doing business there.

Senators told Mr Lighthizer that they wanted the text of any agreement or memo of understanding with China to be made public.

Thus far, there is no text or document that is serving as a draft of the agreement.

Trump administration officials have offered mixed signals and cautious optimism about how the negotiations have been going.

"We've got a pretty sizeable distance to go here," Larry Kudlow, the director of the National Economic Council, said on the Fox Business Network on Thursday.

Mr Kudlow noted that the major concerns that the US had about China's subsidies of state-owned enterprises and ending the forced transfer of technology still must be worked out. And he acknowledged that enforcing any agreement was not easy to achieve.

"How do we judge whether the Chinese are playing by the rules?" Mr Kudlow said.

Mr Mnuchin, speaking on CNBC on Wednesday, would not speculate as to whether the tariffs could be lifted or halted if talks were still continuing by the deadline.

"We're working around the clock," he said. "If we can't get to the deadline, it's not because we haven't worked around the clock."

Although Mr Trump views China's slowing economy as a point of leverage for the US, China experts suggested Mr Xi faced even more pressure domestically to avoid looking weak by caving in to US demands.

"Chinese scholars and their media recently began to show new resistance to President Trump - such as using the phrase 'no one can bully China'," said Michael Pillsbury, a China scholar at the Hudson Institute who advises the Trump administration. NYTIMES