No ad­di­tional tar­iffs on Chi­nese

Trump and Xi strike a lim­ited bar­gain amid their trade dis­pute.

The Washington Post Sunday - - FRONT PAGE - BY DAVID J. LYNCH [email protected]­post.com

BUENOS AIRES — Pres­i­dent Trump took his first step back in his months-long con­fronta­tion with China on Satur­day, agree­ing to can­cel a planned Jan. 1 tar­iff in­crease on Chi­nese prod­ucts in re­turn for pur­chases of what the White House called a “very sub­stan­tial” amount of Amer­i­can farm, en­ergy and in­dus­trial goods.

The lim­ited bar­gain, reached with Chi­nese Pres­i­dent Xi Jin­ping over din­ner, will see the United States and China restart talks aimed at re­solv­ing a trade dis­pute that is dam­ag­ing the global econ­omy, wor­ry­ing some of Trump’s Repub­li­can al­lies, and un­nerv­ing in­vestors.

But the par­tial ac­cord re­called pre­vi­ous deals that ad­min­is­tra­tion of­fi­cials have dis­par­aged as un­en­force­able and un­pro­duc­tive.

The two lead­ers struck the agree­ment dur­ing a din­ner last­ing more than two hours on the side­lines of the Group of 20 sum­mit, per­son­ally tack­ling sev­eral of the great­est ir­ri­tants in the U.S.-China re­la­tion­ship.

Trump and Xi agreed to “im­me­di­ately” be­gin talks on Chi­nese in­dus­trial poli­cies, in­clud­ing co­er­cive li­cens­ing of U.S. tech­nol­ogy, trade se­cret theft and non­tar­iff trade bar­ri­ers.

“This was an amaz­ing and pro­duc­tive meet­ing with un­lim­ited pos­si­bil­i­ties for both the United States and China,” Trump said in a state­ment is­sued from Air Force One as he re­turned to Wash­ing­ton. “It is my great honor to be work­ing with Pres­i­dent Xi.”

Even as Trump appeared to soften his ap­proach to China, he talked tough on a sep­a­rate trade front. Aboard Air Force One, the pres­i­dent told re­porters that he would for­mally ter­mi­nate the 24year-old North Amer­i­can Free Trade Agree­ment in a po­lit­i­cal gam­ble de­signed to force wa­ver­ing law­mak­ers to back his re­place­ment treaty, dubbed the United States-Mex­ico-Canada Agree­ment, or USMCA.

The tem­po­rary cease-fire in the U.S.-China trade war left the tough­est is­sues to fu­ture bar­gain­ing ses­sions, which will at­tempt to suc­ceed where ear­lier ef­forts failed — and un­der an am­bi­tious 90-day dead­line.

If the lat­est ef­fort en­coun­ters the same road­blocks, Trump said he will pro­ceed with his pre­vi­ous plan to raise tar­iffs on $200 bil­lion in Chi­nese prod­ucts to 25 per­cent from 10 per­cent, which was to have taken ef­fect on Jan. 1.

The pres­i­dent also has threat­ened to ex­tend the tar­iffs to ev­ery­thing the U.S. im­ports from China, which would in­volve an ad­di­tional $267 bil­lion in goods. There was no men­tion of that threat in the White House ac­count of Satur­day’s talks.

Some an­a­lysts said the talks had made im­por­tant progress on co­op­er­a­tion on the North Korean nu­clear pro­gram and re­strict­ing il­licit Chi­nese ship­ments to the United States of the ad­dic­tive opi­oid fen­tanyl, but did not rep­re­sent a break­through in com­mer­cial di­plo­macy.

“On stan­dard trade is­sues, this is where we were weeks ago,” said Derek Scis­sors, a China scholar at the Amer­i­can En­ter­prise In­sti­tute and some­times ad­viser to the ad­min­is­tra­tion.

Econ­o­mist Paul Ash­worth of Cap­i­tal Eco­nom­ics wrote in a note to clients: “We’ve been here be­fore . . . China will have to of­fer a lit­tle more than the mi­nor con­ces­sions that South Korea, Mex­ico and Canada agreed to reach trade deals with the U.S.”

The White House quoted Xi as say­ing he is “open to ap­prov­ing” Qual­comm’s $44 bil­lion takeover of NXP Semi­con­duc­tors, which the Amer­i­can com­pany had aban­doned in July af­ter fail­ing to se­cure Chi­nese reg­u­la­tory approvals. China’s re­fusal to ap­prove the deal up­ended the global ex­pan­sion plans of a premier Amer­i­can com­pany and show­cased Bei­jing’s abil­ity to make the U.S. feel fi­nan­cial pain in ways other than tar­iffs.

While the Trump-Xi duet riv­eted most at­ten­dees here, the G-20 lead­ers agreed on a com­mu­nique that re­flected shared am­bi­tions in eco­nomic de­vel­op­ment, fi­nance and trade.

The com­mu­nique was in har­mony with “many of the United States’ big­gest ob­jec­tives,” es­pe­cially in back­ing re­form of the World Trade Or­ga­ni­za­tion, ac­cord­ing to a se­nior ad­min­is­tra­tion of­fi­cial who briefed re­porters on the con­di­tion of anonymity.

On climate change, how­ever, the United States re­mained the lone hold­out, with 19 other lead­ers pledg­ing to im­ple­ment the Paris ac­cord to fight global warm­ing. The United States in­stead re­it­er­ated Trump’s de­ci­sion to with­draw from the ac­cord.

G-20 lead­ers also agreed that the global trad­ing sys­tem “is cur­rently fall­ing short of its ob­jec­tives” and agreed to take stock of pro­posed over­hauls at next year’s sum­mit in Ja­pan.

But it was the United States and China that dom­i­nated the spot­light.

Per­haps not since Pres­i­dent Richard Nixon met Chi­nese leader Mao Ze­dong in 1972 have U.S.-China re­la­tions piv­oted so closely around in­di­vid­ual per­son­al­i­ties, Aaron Fried­berg, a China spe­cial­ist at Prince­ton Univer­sity, said.

“Both men have cast them­selves as ‘max­i­mum lead­ers,’ strong men de­fend­ing the in­ter­ests and honor of their na­tions,” Fried­berg, a for­mer for­eign pol­icy ad­viser to Vice Pres­i­dent Richard B. Cheney, said via email. “Nei­ther wants to ap­pear weak, which would seem to nar­row the scope for com­pro­mise, but nei­ther wants to be blamed for a com­plete break­down in re­la­tions.”

Trump and Xi met in April 2017 at the pres­i­dent’s Florida es­tate, Mar-a-Lago, and in Bei­jing in Novem­ber 2017. Af­ter ne­go­ti­a­tions led by their sub­or­di­nates ran aground, Trump tele­phoned Xi last month to re­open the di­a­logue.

The trade con­flict, which has rat­tled fi­nan­cial mar­kets and up­ended global sup­ply chains, be­gan this year when Trump im­posed tar­iffs on $253 bil­lion of im­ported Chi­nese steel, in­dus­trial prod­ucts and con­sumer goods, in­clud­ing hand­bags, fur­ni­ture and ap­pli­ances.

Chi­nese of­fi­cials, caught off guard by the ag­gres­sive U.S. moves, re­tal­i­ated with im­port taxes on such Amer­i­can prod­ucts as soy­beans, au­to­mo­biles and liq­ue­fied nat­u­ral gas.

Trump and Xi met amid mount­ing wor­ries that trade fights are un­der­min­ing a weak­en­ing global econ­omy. Chris­tine La­garde, man­ag­ing di­rec­tor of the In­ter­na­tional Mone­tary Fund, said Satur­day that “trade ten­sions have be­gun to have a neg­a­tive ef­fect” and are in­creas­ing the risk that growth will dis­ap­point.

“This was an amaz­ing and pro­duc­tive meet­ing with un­lim­ited pos­si­bil­i­ties for both the United States and China.” Pres­i­dent Trump

PABLO MARTINEZ MON­SI­VAIS/AS­SO­CI­ATED PRESS

Chi­nese Pres­i­dent Xi Jin­ping and Pres­i­dent Trump face each other across a din­ner ta­ble on the side­lines of the G-20 sum­mit in Buenos Aires. They dis­cussed their trade war, which some ob­servers fear is slow­ing global eco­nomic growth, and came to a lim­ited agree­ment.

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