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Trump promises ‘epic’ trade deal with China, but holds off on summit with Xi Jinping for now

Speaking to reporters April 4, President Trump said Chinese President Xi Jinping would be invited to a summit in the United States only "if we have a deal." (Video: The Washington Post)

President Trump touted prospects for an “epic” trade deal with China on Thursday but acknowledged that a settlement of a year-long commercial conflict remained at least a month away.

Speaking at an Oval Office meeting with Chinese Vice Premier Liu He, Trump said a trade agreement between the two countries could come “within the next four weeks” followed by an additional two weeks to polish the text.

Trump has won little from China so far. There isn’t an ‘incredible’ deal yet.

The president, with a salesman’s flair, billed the hoped-for deal as “monumental” and “the granddaddy of them all.”

But Trump said it was too soon to set a date for a signing summit with Chinese President Xi Jinping with negotiators still haggling over core questions, such as a proposed enforcement mechanism and the future of each side’s import tariffs.

“We have a ways to go,” the president told reporters. “We are rounding the turn.”

Xi also sounded an upbeat note, conveying to Trump through Liu that he wanted an early conclusion to the negotiations on the text of a bilateral trade deal.

Liu said Xi believes that “strategic leadership” was needed for the “healthy, stable development of China-U.S. ties,” according to China’s state-run Xinhua News Agency.

President Trump told a story Feb. 25 about asking Chinese President Xi Jinping to help release the three UCLA basketball players arrested in China in 2017. (Video: The Washington Post)

The two sides had reached a “new consensus” on the text of a deal during the latest round of talks in Washington this week, Liu said.

A deal would end a commercial spat that has unsettled relations between the world’s two largest economies, disrupted corporate supply chains and left Americans slightly poorer, according to economists.

Trump’s upbeat remarks, delivered on the second of three days of talks this week between U.S. and Chinese negotiators, maintained the positive presidential drumbeat that began earlier this year.

On Feb. 22, Trump said he planned to meet with Xi “in the not-too-distant future.” Three days later, he predicted that he would sign a deal “fairly soon.”

The president’s thirst for an agreement with China has grown since the stock market began sliding from its October peak.

From the outset, his administration has been divided between advisers who fear the trade war’s impact on the economy and financial markets and those who believe a showdown with China is long overdue.

The stock market’s slide late last year increased the influence of market-friendly figures such as Treasury Secretary Steven Mnuchin, a former executive at the investment bank Goldman Sachs.

Why the U.S. shouldn’t welcome a Chinese ‘king’

Trade hawks such as chief negotiator Robert E. Lighthizer see the confrontation with China as perhaps Washington’s last chance to reset relations with a nation intent on supplanting the United States as the world’s technology leader.

In recent bargaining sessions, negotiators have closed the gap on provisions governing digital trade and access for American banks and financial institutions to China’s market.

“There is indeed a lot of progress being made,” said Myron Brilliant, executive vice president of the U.S. Chamber of Commerce. “Both sides are working hard to wrap up the talks as soon as possible.”

Michael Pillsbury, a China expert at the Hudson Institute, said the emerging accord would not erase all of the irritants in the U.S.-China relationship. “It’s closer to being a cease-fire,” said Pillsbury, an occasional Trump adviser on China.

It remains unclear whether the United States will cancel some or all of the tariffs the president imposed last year on more than $250 billion worth of Chinese imports. The president has spoken of keeping at least some tariffs in place as leverage to encourage the Chinese government to comply with an eventual agreement.

China is pushing for the tariffs to be removed before it will agree to lift its retaliatory tariffs on U.S. farm products and industrial goods including autos.

Trump boasts about the money the government collects in tariff payments, though he often insists incorrectly that foreigners pay the tab rather than Americans. A pair of recent academic studies concluded that the entire tariff burden has fallen on Americans.

Tariffs on imports from China and other countries reduced U.S. real income by $1.4 billion per month and had a similar effect on countries that had retaliated against the United States, according to a study by economists David Weinstein of Columbia University, Mary Amiti of the Federal Reserve Bank of New York and Princeton University’s Stephen J. Redding.

Also unclear is whether China will agree to the administration’s demand for an enforcement mechanism allowing the United States to reimpose tariffs if it believes China is not fulfilling its obligations.

Though Trump has been pushing for the Chinese leader to travel to the United States to sign a trade deal, Xi is unlikely to do so unless the agreement is 100 percent complete. If the two leaders decide to haggle in person over any final details, a third-country venue is more likely.

Trump said Thursday that any summit would be “here,” but he did not specify whether he meant Washington or elsewhere in the United States.

“Both leaders do seem to want a deal, so it’s likely they’ll get there,” said Timothy Keeler, a partner at Mayer Brown and a former chief of staff for the U.S. Trade Representative in the George W. Bush administration.

Trump long has been an outspoken critic of Chinese trade practices. During his presidential campaign, he assailed China for the “rape” of the American economy.

He also vowed to eliminate the United States’ chronic trade deficit with China, yet saw it climb to a record $419.2 billion in 2018.

The president imposed tariffs on Chinese goods last year after concluding Beijing was forcing U.S. companies to surrender proprietary technology in return for being allowed to do business in China.

Lighthizer, the chief U.S. trade negotiator, also has complained about Chinese hackers stealing American trade secrets and discriminating against foreign companies.

In several rounds of talks, negotiators have roughed out an agreement of more than 120 pages that would include Chinese promises to restructure elements of its state-led economy and to boost substantially their purchases of U.S. products.

The president’s focus on securing huge new Chinese orders for American soybeans, aircraft and other products is expected to produce political gains in export-dependent states.

He has pressed negotiators to ensure Chinese buyers place the bulk of promised orders before the 2020 election, according to Derek Scissors, a China expert at the American Enterprise Institute whom the administration has consulted during the talks.

Scissors, and others who see China as a U.S. adversary, worry the trade bargain may carry unintended consequences.

“Do we want to become more dependent on China as an export market?” he asked.

Anna Fifield in Beijing contributed to this report.