President Trump stoked expectations Monday for a successful conclusion to U.S.-China trade talks, saying he anticipated signing an agreement with Chinese President Xi Jinping “fairly soon.”
Speaking to a gathering of the nation’s governors at the White House, Trump was optimistic about closing the remaining gaps over U.S. demands for major changes in China’s state-led economic system.
“We’re going to have another summit. We’re going to have a signing summit, which is even better,” the president said, referring to plans he announced Sunday to host the Chinese leader at his Mar-a-Lago estate in Florida next month. “So hopefully, we can get that completed. But we’re getting very, very close. . . . I think it’s going to happen, and it could happen fairly soon.”
Trump spoke as investors digested his cancellation one day earlier of a scheduled increase in tariffs on $200 billion in Chinese goods to give negotiators more time to strike a deal. The import levies were slated to rise to 25 percent on Saturday from 10 percent, a move that would have significantly increased the trade war’s economic costs.
The Dow Jones industrial average closed at 26,091.95, up more than 60 points or 0.23 percent. That paled alongside the performance of Chinese stocks, which enjoyed their best day in more than three years Monday, with the blue-chip CSI 300 index rising nearly 6 percent.
The president’s cancellation of the tariff hike stirred worries among some supporters, who fear he will abort his confrontation with China and settle for a weak deal.
Trump said Sunday that negotiators had made “substantial progress” on core structural issues, including intellectual-property protection and compulsory technology licensing requirements for U.S. businesses in China. But administration officials have provided no details, and business leaders who have been briefed on the talks say a yawning gap still separates the two sides.
“What has me shaking my head is this move to give away perhaps our greatest point of leverage in the talks without getting anything in return,” said Scott Paul, president of the Alliance for American Manufacturing. “I don’t count this as a win for American workers.”
Michael Stumo, head of the Coalition for a Prosperous America, said Trump is heeding advisers who prioritize financial market considerations.
“The Wall Street and globalist wing of the administration seem to be pushing for a short-term deal that we know will not be sufficient for our long-term interests,” he said.
Weakness in both countries’ manufacturing industries may be motivating the American and Chinese presidents to seek a deal, according to Pantheon Macroeconomics, a financial research firm.
Earlier this month, the Philadelphia Federal Reserve Bank’s manufacturing gauge sank to its lowest level in nearly three years, while a separate measure, the flash purchasing managers’ index, posted its worst mark in 17 months.
Chinese industrial benchmarks likewise have disappointed.
That helps explain Chinese state media’s applause for Trump’s concession on his planned tariff increase, a move that is viewed as averting an increasingly damaging commercial conflict.
The two sides are inching “closer to reaching a mutually beneficial and win-win agreement,” said China’s state-owned Xinhua news service.
“The extension of the latest round of negotiations and the delaying tariff increase on Chinese imports testify to the sincerity, high attention and sense of urgency of both the Chinese and U.S. sides,” Xinhua reported. “Yet they also indicate that there are still some differences that need more time to be ironed out.”
The U.S. trade deficit with China is expected to have grown to more than $400 billion in 2018, a record.
The question now is whether the trade deal between the two countries will amount to pledges from China to buy more American products, such as soybeans and liquefied natural gas, to narrow that gap, or whether the Trump administration can persuade Beijing to embark on painful structural reforms.
The two nations met for a seventh round of talks last week, the third in a month, to try to make headway.
Trump’s Sunday night tweet on tariffs showed how far apart the two remain, said James Zimmerman, an American lawyer in Beijing and former head of the American Chamber of Commerce in China.
“The tariff postponement simply means that both sides realize that they are nowhere near a viable deal, and to avoid a showdown later this week, they need some breathing room,” he said.
Last week, the president suggested that the dispute over Huawei Technologies, the world’s largest communications equipment manufacturer, was also part of the discussion. Asked if he would consider dropping criminal charges against Huawei as part of a deal, Trump said Friday that he would discuss the issue with the attorney general and U.S. attorneys.
The Justice Department announced criminal charges last month against Huawei and its chief financial officer, Meng Wanzhou, alleging bank and wire fraud, violations of U.S. sanctions on Iran, and a conspiracy to obstruct justice related to the investigation.
Meng, the daughter of the well-connected founder of Huawei, was arrested in Canada and is now fighting extradition to the United States, where she could face up to 30 years in prison if found guilty on all counts.
China has since arrested two Canadian citizens on charges of endangering national security, and authorities in Beijing continue to push for Meng’s release.
Zimmerman decried Trump’s attempt to link Meng’s arrest to the trade bargaining.
“Tying a criminal investigation to trade negotiations is unwise horse trading and a further erosion of the rule of law,” he said. “It creates a bad precedent where we now live in an era of ‘take hostages, then talk.’ ”
Fifield reported from Beijing. Liu Yang and Lyric Li contributed to this report.