China-US trade deal likely to begin at G20

President Xi may fill out the picture today when he is due to address a trade fair in Shanghai

US President Donald Trump often seems to be caught between his ideological desire to rewrite America’s trade relationship with China and a businessman’s instinct to cut a deal. And with tomorrow’s midterm elections looming and financial markets coming off a rough October, the dealmaker appears to have upper hand.

“We’ll make a deal with China, and I think it will be a very fair deal for everybody,” Trump told reporters on Friday after asking aides the day before to begin drafting ideas for an agreement to take to his planned meeting with Chinese President Xi Jinping at the Group of 20 summit in Argentina on November 30-December 1. The two sides are “getting much closer to doing something,” he said.

Still, to satisfy Trump’s own inner ideologue — and the China hawks in his administration — that “something” is going to have to hang on substance, is where things are likely to get complicated.

Xi may fill out the picture today when he is due to address a trade fair in Shanghai. Analysts familiar with White House discussions, however, say any deal struck at the G-20 is likely to take the form more of a temporary truce than anything that will bring a final peace in the trade wars. Such a ceasefire could, they said, see a commitment to forgo additional tariffs, and possibly even to remove some, while high-level officials negotiate a broader pact. Any of those things would in the current context be a significant achievement and be welcomed by markets. But they would also leave Beijing and Washington facing arduous negotiations ahead, as one senior administration official indicated on Friday.

“If there’s goodwill and agreement, at least personal agreement between the two presidents of the two biggest economies, we’ll move forward after it and try to work with the Chinese on details,” Larry Kudlow, head of Trump’s National Economic Council, told a conference in Chicago.