Chinese promises never delivered

China Reneged on Trade Commitments
By Ana Swanson and Keith Bradsher

President Trump is facing pressure to show that the pain of his trade war will be worth it for the companies, farmers and consumers caught in the middle.

WASHINGTON — President Trump’s top economic advisers on Monday accused China of reneging on previous commitments to resolve a monthslong trade war and said Mr. Trump was prepared to prolong the standoff to force more significant concessions from Beijing.
Mr. Trump, angry that China is retreating from its commitments just as the sides appeared to be nearing a deal and confident the American economy can handle a continuation of the trade war, will increase tariffs on $200 billion worth of Chinese goods on Friday morning, his top advisers said.
“We’re moving backwards instead of forwards, and in the president’s view that’s not acceptable,” his top trade adviser, Robert Lighthizer, told reporters on Monday.

“Over the last week or so, we have seen an erosion in commitments by China.”
Mr. Trump’s last-minute escalation highlights his administration’s difficult political position as it tries to fend off criticism that he has not been sufficiently tough on China. 

The president is facing pressure to show that the pain of his trade war will be worth it for the companies, farmers and consumers caught in the middle. 

Mr. Trump’s decision to upend an agreement that many expected to be finalized this week in Washington appears to be a political calculation that staying tough on China will be a better proposition in the 2020 campaign.
Fueling that decision is the president’s growing confidence that his trade policies are bolstering the American economy, without any downside. 

Mr. Trump and his advisers have seized on strong first-quarter economic growth as vindication that their tough approach to trade is accelerating the economy, and putting the United States in a stronger position than China to withstand any blowback from higher tariffs. 

Gross domestic product surged past forecasts in the first quarter, rising 3.2 percent on an annual basis in part because of a sharp slowdown in imports.
Steven Mnuchin, the Treasury secretary, attributed the strong growth to Mr. Trump’s economic policies, including on trade.
“There’s no question that some of the trade policies helped in the G.D.P. number,” Mr. Mnuchin said.

American investors seemed to back Mr. Trump’s position on Monday, as markets opened lower but then largely shrugged off Mr. Trump’s threat to raise tariffs on $200 billion worth of goods to 25 percent on Friday and eventually tax an additional $325 billion worth of Chinese products.
A final trade agreement could still be reached. 

Mr. Lighthizer and Mnuchin said on Monday that the Chinese delegation had not canceled travel plans to come to Washington on Thursday and Friday for negotiations.
“We’re not breaking up talks at this point,” Mr. Lighthizer said.
Mnuchin said the United States would reconsider imposing higher tariffs on China if the negotiations got “back on track.” 

He added that negotiators had been optimistic in the past about the prospects for a deal and had been planning for a summit meeting between Mr. Trump and Xi Jinping to finalize the deal.
But Mnuchin said it became “particularly clear over the weekend” that the Chinese had moved negotiations “substantially backwards.”
China, which depends on the United States economy for trade, said on Monday that it still planned to send a delegation to the United States this week for talks, though a spokesman for the Chinese Foreign Ministry declined to specify whether it would include Vice Premier Liu He, who has led the talks for the Chinese.
The threat of additional tariffs poses a major problem for Xi, who had been counting on a trade deal to keep China’s growth engine humming.
China’s economic growth began to slow last year as Beijing tried to tame the country’s overreliance on lending. 

President Trump’s initial tariffs last year hurt Chinese manufacturers and consumer confidence, worsening the slowdown. 

China’s economic slowdown limited Xi’s options to retaliate against American tariffs and put pressure on him to reach a deal.
In recent months, thanks in part to new lending, China’s slowdown appeared to stabilize. 

The prospect of a trade deal also increased consumer and investor confidence and led many economists to project that China’s growth would improve.
New tariffs could derail that progress.
“If tariffs are hiked this Friday and new tariffs come soon after that, the biggest negative impact will likely occur in the next few months,” Tao Wang, an economist specializing in China at UBS, said in a research note.
She estimated that a full-blown trade war with the United States could cut China’s economic growth rate by 1.6 to 2 percentage points over the next 12 months. 

That would be a considerable cut: Last year, China’s economy grew 6.6 percent, according to official figures, and the government has set an official target of 6 to 6.5 percent this year.
On Monday, Mr. Trump repeated his insistence that China rebalance its economic relationship with the United States and end its role as a net exporter of goods.


Donald J. Trump
✔@realDonaldTrump
The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!

The decision to up the ante came after Mr. Trump’s trade advisers made a short trip to Beijing last week. 

Mr. Lighthizer returned from that visit dismayed by China’s refusal to mention commitments it had made to update various Chinese laws in the final text of the trade agreement, people familiar with the situation said. 

Even Mnuchin, who has been more optimistic about the prospects of a deal, was dismayed that the Chinese were not doing more to reach an agreement.
Instead, Chinese negotiators had insisted that any concessions would need to be achieved through regulatory and administrative actions, not changes to Chinese law passed through its legislature. 

The provisions included the forced transfer of technology from American companies to Chinese firms.
Chinese negotiators have also continued to insist that Mr. Trump lift the tariffs he has placed on $250 billion worth of goods more quickly than the administration wants. 

With the two sides still disagreeing over issues including how China subsidizes its companies, its restrictions on data transfers, its approvals of genetically modified seeds and rules for foreign cloud computing companies, the president concluded late last week that China’s offers were not good enough.
On Sunday, Mr. Trump’s tariff threats drew praise from both sides of the political aisle.
“Hang tough on China, President @realDonaldTrump,” Senator Chuck Schumer of New York, the Democratic leader, said on Twitter.
“Excellent decision by @realDonaldTrump!” Laura Ingraham, a Fox News host, tweeted, which the president retweeted onto his feed. 

“No other president has had the guts to take on the China challenge.”
Mr. Lighthizer said on Monday that the United States was targeting some “very pernicious actions” by the Chinese, and that reversing them would have an enormous benefit for the American economy and the world. 

He also pushed back against reports that the evolving agreement would do little to address China’s subsidization of key industries.
Analysts have questioned whether volatility in the stock markets could change the president’s mind. Mr. Trump’s tariff threats caused markets in Asia to plummet Monday morning, but in the United States, the S&P 500 index closed down 0.45 percent, while the Dow Industrial was down just 0.25 percent.
It was unclear whether markets viewed Mr. Trump’s tariff threat merely as a negotiating tactic. 

The president has turned to tariffs as a source of leverage to bring other negotiations to the close. 

In talks last year over the North American Free Trade Agreement, Mr. Trump threatened to leave Canada out of the deal entirely and strike a deal with Mexico, a gambit that brought negotiations to a rapid conclusion.
In a note on Monday, Joshua Shapiro, the chief United States economist for MFR, an economic research firm, said his forecast and most others assumed that the United States-China trade talks resulted in no further damage, at a minimum. 

Conflict of Interest

Mnuchin’s Hollywood Ties Raise Ethical Questions in China Talks

By Alan Rappeport and Ana Swanson

The Treasury secretary, Steven Mnuchin, and Louise Linton, his wife, at the White House before a state dinner in April honoring President Emmanuel Macron of France.

WASHINGTON — “Wonder Woman,” the 2017 film that Steven Mnuchin helped produce before becoming Treasury secretary, hauled in about $90 million at the box office in China. 

It was the film’s most successful international market and a roaring success for an American superhero export. 

But because of China’s strict laws for foreign films, the studio behind the movie, Warner Bros., received just a small fraction of those revenues.
Now, as Treasury secretary and one of the lead negotiators in trade talks with China, Mnuchin has been personally pushing Beijing to give the American film industry greater access to its markets — a change that could be highly lucrative to his former industry.
While Mnuchin divested from his Hollywood film production company after joining the Trump administration, he maintains ties to the industry through his wife, the actress and filmmaker Louise Linton.
In 2017, Mnuchin sold his interest in the company, StormChaser Partners, to Linton, who at the time was his fiancée.
In his 2018 disclosure, which was obtained from the Treasury Department through a records request by The New York Times, StormChaser is listed as one of Linton’s assets.
Since they are now married, government ethics rules consider the asset to be owned by Mnuchin. And while the documents show that Mnuchin sold his stake to Linton for $1 million to $2 million, he is now owed that same amount, in addition to interest, from StormChaser in 2026, according to the 2018 form.
Mnuchin’s remaining ties to the film industry are raising questions among ethics officials and lawmakers about whether a conflict of interest exists.
At a congressional hearing on Thursday, Mnuchin was questioned by a top Senate Democrat about those continuing financial ties.
The Office of Government Ethics still has not certified his 2018 financial disclosure, which is the first since his marriage to Linton.
Access to China’s film market has not been a primary issue in the trade talks, which have focused largely on Beijing’s treatment of foreign companies, including its requirement that firms hand over valuable technology, its barriers to foreign business and its subsidies to Chinese firms.
But Mnuchin has championed more equitable treatment of American films in China, viewing existing restrictions on foreign entertainment as part of the problematic behavior the Trump administration is trying to correct.
Under the current system, foreign companies must secure Chinese partners to enter China’s market and they are restricted in how much they can earn as part of the arrangements.
China applies a strict quota for the number of Hollywood films it lets into its theaters.
For most box office showings, Chinese companies take in 75 percent of all revenue, leaving the remainder to Hollywood. 
To operate in the tightly managed Chinese entertainment sector, American companies have also had to form a vast network of complicated ties with Chinese state-owned firms.
Since the trade talks began last year, film lobbyists have met with Mnuchin’s top deputies, as well as with officials from the Commerce Department and the office of the United States Trade Representative.
Mnuchin has been especially responsive to lobbying from the film industry, according to people familiar with the discussions, given his background and understanding of the challenges that American moviemakers face in China.
At a congressional hearing last month, Robert Lighthizer, President Trump’s top trade negotiator, said increasing the revenue share earned by American film companies in China was “absolutely” a priority in the talks, and he highlighted Mnuchin’s role.
“Mnuchin has been very much involved,” Lighthizer added.
“He of course knows a great deal about that industry, a lot more than I do.”
On Thursday, Senator Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, raised concerns about Mnuchin’s financial ties to the film industry and asked the Treasury secretary whether he had, in fact, really divested himself of the StormChaser asset listed on his disclosure form.
Mr. Wyden also suggested that the transaction might have been more of a loan to Linton than a true financial separation from StormChaser.
“What we have wondered is if there has been an exchange of an asset for a loan rather than a divestment,” Mr. Wyden said.
Mnuchin declined to discuss details of the transaction, but said that his financial disclosures were certified by career ethics officials in the Treasury Department.
“I am advised by people at Treasury that I am fully in compliance and I have no ethical issues,” Mnuchin said.
When asked by reporters after the hearing why his StormChaser ties did not represent a conflict of interest, Mnuchin said that he would not discuss any specific assets.
Treasury noted separately that Mnuchin’s disclosure was certified internally on June 27, 2018, and that the department was working with the Office of Government Ethics to obtain its certification.

Gal Gadot in a scene from “Wonder Woman,” which Mnuchin helped produce.

Mnuchin and Linton, who married in 2017, brought Hollywood glitz to Washington, but their continuing links to the film industry have also brought complications.
After working for 17 years at Goldman Sachs, Mnuchin in the last decade became a big name in Hollywood as a film investor.
His companies, Dune Entertainment and later RatPac-Dune, helped produce and finance dozens of films that were box office smashes in China, including “Avatar,” “Gravity,” “Dunkirk,” “Wonder Woman” and “Ready Player One.”
Mnuchin was also a co-chairman of Relativity Media, a fledgling Hollywood studio that had a joint venture in China.
During his confirmation hearing in 2017, Mnuchin said that Relativity’s joint venture in China was “not particularly successful.”
He said that he was not aware of direct Chinese investment in the business but that, in the future, Chinese investments in Hollywood may need to be reviewed by the Committee on Foreign Investment in the United States, which the Treasury secretary oversees.
Mnuchin agreed to divest from dozens of investments in early 2017, after he was nominated by Mr. Trump.
Later that year, he sent a letter of apology to the Office of Government Ethics after appearing to promote one of his movies when he said at an event, “Send all your kids to ‘Lego Batman.’”
This month, the Center for Public Integrity reported that Mnuchin’s most recent financial disclosure, which Treasury approved last June, has yet to be certified by the ethics office.
That has raised questions about the reason for the delay.
Ethics experts have pointed to Mnuchin’s continuing ties to StormChaser Partners as a potential reason for the holdup.
“It certainly creates a significant appearance issue,” said Virginia Canter, a former senior ethics counsel at the Treasury Department.
“Not just because he previously was in the entertainment business, and may in fact go back into it at some point when he leaves Treasury, but because his spouse appears to have holdings in these films and is part of the film industry and may benefit if favorable terms are negotiated with China.”
According to a report in The Hollywood Reporter this year, Linton spends much of her time in Los Angeles, where she has been writing, directing and producing a comedy called “Me, You, Madness.”
She has also been busy reshooting “Serial Daters Anonymous,” a 2014 satire that was never released in which she had a starring role.
She told the magazine that financing for her films comes from “a variety of investors.”
While Mnuchin’s role in pressing for the film industry has raised some concerns, there is broad support in the United States to push for changes to China’s film regulations.
The film industry supports more than two million American jobs, according to industry data, and Hollywood has been a powerful force for exporting American culture around the world.
“Even if concessions are made in trade negotiations there’s a long way to go, because the business environment continues to keep Hollywood from operating on an equal plane,” said Aynne Kokas, an assistant professor of media studies at the University of Virginia and the author of “Hollywood Made in China.”
Still, the China market has been lucrative for Hollywood, offering a rapidly growing box office and a ready source of financing, at a time when the American industry faces pressure from streaming services like Netflix and Amazon Prime and a saturated film market in the United States.
Hollywood has found the lure of the China market irresistible, even though operating in China means enduring censorship and unfair treatment as well as working with state-owned companies.
Hollywood has long been a victim of rampant piracy in China, including from bootleg DVDs distributed in back alley stores and online streaming services.
But China has done a better job of policing these forms of piracy in recent years as its own industry has developed, said Stanley Rosen, a professor at the University of Southern California.
“As their films are being pirated, they are now beginning to enforce copyright protections of their own films,” Mr. Rosen said.
Despite better intellectual property protection, the playing field for foreign companies is far from even.
China still limits the number of Hollywood films that can appear in its movie theaters, the dates those films can appear and the distributors they can use to reach the theaters. 
And Chinese censors only welcome films that show their country in a positive light — censorship that has led American studios to make editorial choices like depicting North Koreans as villains rather than the Chinese, or smashing the Taj Mahal rather than the Great Wall of China.
Even for box office hits, Hollywood studios receive a quarter of ticket proceeds, with the rest going to Chinese partners. 
Increasing that to the global average, which is around 40 percent, is one of the industry’s biggest requests.
Last month, Mr. Lighthizer said that this was a “key issue” that “had not been resolved” in negotiations.
Mr. Lighthizer also described restrictions on distribution as complicated, saying: “There should be some changes there, too, but what we haven’t done is challenge control. It’s not something we want to bring into this, the idea of challenging control in China.”
In another congressional hearing this week, Mr. Lighthizer reiterated that the United States was renegotiating the amount of Chinese box office revenue shared with American firms, saying it was a “very unfair situation.”
Like many other American industries, Hollywood has grown frustrated with China’s pattern of promising to open its film market, only to fail to do so. 
As early as 2001, the World Trade Organization urged China to open up its film market.
An agreement between the two countries governing China’s rules for Hollywood films expired in February 2017, and it has not been renegotiated.
Some lawmakers hope that Mnuchin and Mr. Lighthizer will be able to finally change that.
“This is our opportunity to even the playing field here to some extent,” Representative Judy Chu, Democrat of California and a member of the Ways and Means Committee, said in an interview. “The U.S. film industry clearly has been at a disadvantage.”

The Art of the Deal

President Trump says he is in no rush to complete China trade deal

By Steve Holland, Jeff Mason

WASHINGTON -- U.S. President Donald Trump said on Wednesday he was in no rush to complete a trade pact with China and insisted that any deal include protection for intellectual property, a major sticking point between the two sides during months of negotiations.
Trump and Chinese dictator Xi Jinping had been expected to hold a summit at the president’s Mar-a-Lago property in Florida later this month, but no date has been set for a meeting and no in-person talks between their trade teams have been held in more than two weeks.
Bloomberg reported on Thursday that a meeting between the two was more likely to take place in April at the earliest.
A person familiar with the matter told Reuters that there “were rumblings” in Washington about a possible meeting in late April.
The president, speaking to reporters at the White House, said he thought there was a "good chance" a deal would be made, in part because China wanted one after suffering from U.S. tariffs on its goods.
But he acknowledged Xi may be wary of coming to a summit without an agreement in hand after seeing President Trump end a separate summit in Vietnam with North Korean leader Kim Jong Un without a peace deal.
“I think Xi saw that I’m somebody that believes in walking when the deal is not done, and you know there’s always a chance it could happen and he probably wouldn’t want that,” Trump said.
China has not made any public comment confirming Xi is considering going to meet Trump in Florida or elsewhere.
The president, who likes to emphasize his own deal-making abilities, said an agreement to end a months-long trade war could be finished ahead of a presidential meeting or completed in-person with his counterpart.
“We could do it either way. We could have the deal completed and come and sign, or we could get the deal almost completed and negotiate some of the final points. I would prefer that,” he said.
President Trump decided last month not to increase tariffs on Chinese goods at the beginning of March, giving a nod to the success of negotiations so far.
But hurdles remain, and intellectual property is one of them. 

Washington accuses Beijing of forcing U.S. companies to share their intellectual property and transfer their technology to local partners in order to do business in China. 

Asked on Wednesday if intellectual property had to be included in a trade deal, Trump said: “Yes it does.”
He indicated that from his perspective, a meeting with Xi was still likely.
“I think things are going along very well -- we’ll just see what the date is,” Trump told reporters at the White House.
“I’m in no rush. I want the deal to be right... I am not in a rush whatsoever. It’s got to be the right deal. It’s got to be a good deal for us and if it’s not, we’re not going to make that deal.”

‘MAINTAINING CONTACT’
China’s Foreign Ministry said on Tuesday that Xi had previously told Trump that he is willing to “maintain contacts” with the U.S. president.
China industrial output growth falls to 17-yr low, more support steps expected
Over the weekend, Vice Commerce Minister Wang Shouwen, who has been deeply involved in the trade talks with the United States, did not answer questions from reporters on whether Xi would go to Mar-a-Lago.
Two Beijing-based diplomatic sources, familiar with the situation, told Reuters that Xi would not be going to Mar-a-Lago, at least in the near term.
One said there had been no formal approach from the United States to China about such a trip, while the second said the problem was that China had realized a trade agreement was not going to be as easy to reach as they had initially thought.
“This is media hype,” said the first source, of reports Xi and Trump could meet this month in Florida.
Though Trump said he is not in a hurry, a trade deal this spring would give him a win to cite as an economic accomplishment as he advances his 2020 re-election campaign. 

The trade war has hurt the global economy and hung over stock markets, which would likely benefit from an end to the tensions.
In addition to smoothing over sticking points on content, the United States is eager to include a strong enforcement mechanism in a deal to ensure that Beijing can be held accountable if it breaks any of its terms.
U.S. Trade Representative Robert Lighthizer, who has spearheaded the talks from the American side, said on Tuesday that U.S. officials hoped they were in the final weeks of their talks with China but that major issues remained to be resolved.

Fear of President Trump Walking on Xi Haunts China as Trade Talks Near End

• Beijing plays coy on summit, uncertain it can trust President Trump
• President Trump battling his own reputation for last-minute surprises

By Shawn Donnan and Kevin Hamlin

Donald Trump regularly touts the strength of his personal relationship with Xi Jinping, talking about the Chinese leader in the sort of warm terms U.S. presidents normally reserve for longstanding allies.
Yet as the world’s two largest economies inch towards a trade agreement designed to define and reorder their economic relationship for years to come, one question looms large: Does Xi trust Trump enough to get on a plane and seal the deal?
Trump and his aides have for weeks been pushing for Xi to agree to a meeting at Mar-a-Lago, the president’s club and resort in Palm Beach, Florida, to finalize a deal as soon as this month to end a dispute that has cast a shadow over the global economy. 

Trump himself has said that it’s only when the two leaders meet that the final details can be ironed out.
Chinese officials, however, have long been wary of putting Xi in a position where he might be embarrassed by an unpredictable President or forced into last-minute concessions.

“That is the real conundrum for Xi,’’ said Eswar Prasad, an expert on the Chinese economy at Cornell University who regularly meets with senior officials in Beijing. 

“The concern about being snookered by President Trump at the negotiating table is a real risk for Xi.’’
China’s worries are flipping the U.S. script on its head. 

As President Trump claims to be the first American president to stand up to Beijing, his aides have built a possible deal on a foundation of distrust. 

In their view, a China that has for decades lied and cheated its way to economic success cannot be trusted to live up to any commitments unless a deal has teeth.

“That’s the fundamental question,’’ Robert Lighthizer, the U.S. trade representative, told Congress on Feb. 27. 

“What the president wants is an agreement that number one is enforceable.’’
Officials in Beijing insist they’ve played by international rules and just want to be sure President Trump won’t again kill an agreement at the last minute. 

President Trump has rejected at least two deals brought to him since he first hosted Xi at Mar-a-Lago in April 2017: One struck by Commerce Secretary Wilbur Ross for China to cut steel overcapacity, and another negotiated by Treasury Secretary Steven Mnuchin last year. 

Both would’ve averted a trade war.
The latter one was particularly jarring for Xi, who faces pressure in China to avoid giving up too much in a deal with President Trump. 

Liu He came to Washington as Xi’s special representative, and declared to China’s state-run media that a trade war had been averted. 

After Trump backtracked, talks stalled for months until the two leaders met in December at the Group of 20 summit in Argentina.
Last month, Trump’s decision to walk away from his Hanoi summit with North Korea’s Kim Jong Un without a deal only reinforced China’s concerns about the president’s unpredictability.

President Donald Trump with Kim Jong Un in Hanoi on Feb. 27.

Former Commerce Vice Minister Wei Jianguo argues that because the U.S. and China are great powers President Trump would never walk away from Xi as he did Kim. 

The consequences would be too great. 

There are parallels for the Chinese.
In 1999, Chinese Premier Zhu Rongji faced a nationalist backlash after a last-minute change of course by the Clinton administration threw a deal for China’s accession to the World Trade Organization into doubt.
Erin Ennis, who tracks the negotiations for the U.S.-China Business Council, said a President Trump snub of Xi this time around would be an order of magnitude greater than any previously. 

Then again, she said, “I don’t think the Chinese are the only government in the world that is not entirely sure what they are getting when they send their head of state into a meeting with the president of the United States.’’

Daily Talks
Trump has for months pushed to sign a deal, and that has fundamentally changed the dynamics of negotiations. 

In recent days both sides have held daily conference calls. 

China’s state-run Xinhua News Agency reported Tuesday that Liu, Lighthizer and Mnuchin decided on arrangements for the next stage of trade talks, without providing more details.
China last week revised an offer on intellectual-property protection, one focal point of the negotiations, according to people briefed on the offer. 

It has also pledged to increase purchases of American goods by $1.2 trillion over six years and to open its market in some key sectors, raising hopes that it might finally allow U.S. firms to compete in forbidden areas such as cloud computing.
As a deal gets closer, Chinese officials also want the U.S. to agree that any commitments go both ways, particularly on enforcement.
The U.S. wants China to agree not to retaliate against any punitive measures Washington might apply if Beijing doesn’t meet its commitments. 

But Vice Commerce Minister Wang Shouwen over the weekend countered any enforcement mechanism would have to be “two-way, fair and equal.”

‘Judge, Jury’
“I’m not sure if China would ever allow the United States to be the judge, jury and sheriff on these issues and that seems to be the core of what the U.S. is asking for,’’ said Wendy Cutler, a former senior U.S. trade negotiator who heads the Asia Society Policy Institute.
President Trump could see political benefits from walking away from a deal. 

He’s already facing questions about the quality of the agreement and whether the trade war he started -- and the economic damage it has brought in farm states in particular -- will prove to have been worth it. 

Experts inside his administration also fear President Trump is being led into a bad deal with a China that will remain a growing strategic threat.

Still, both presidents have their reasons to settle their differences.
President Trump is under pressure to prove his “America First’’ trade policies can deliver, the evidence for which is mixed so far. 

Since 2016 the U.S. trade deficit -- Trump’s own favorite metric -- has blown out by almost $120 billion, or more than 20 percent.
Meanwhile, a successful summit in Mar-a-Lago would enable Xi to silence his own domestic critics, said Steve Tsang, director of the SOAS China Institute at the University of London. 

"If he cannot get some kind of a ‘decent’ deal with President Trump and the economy continues to slide, the pressure on Xi will build up," he said.

Clown King?

Trump Undermines Top Trade Adviser as He Pushes for China Deal

By Ana Swanson

WASHINGTON — Trump has signaled that he is moving toward peace with China in a trade standoff that has rattled markets and businesses globally. 

But as he backs off his threat to impose higher tariffs, the president’s relationship with his own trade negotiator is now showing signs of strain.
The situation has left Trump’s trade representative, Robert Lighthizer, who is both an ardent supporter of the president and a longtime China critic, in an uncomfortable bind. While broad tariffs on Chinese imports brought Beijing to the negotiating table, Trump has grown impatient with the talks, and a consensus is growing in Washington that Trump will ultimately accept a weak deal.
And despite the lack of a transformative arrangement he once promised, Trump has begun dangling the idea of a “signing summit” with Xi Jinping at Mar-a-Lago, Trump’s Florida resort. 

As a result, Trump is undermining Mr. Lighthizer as he tries to pressure China to make big concessions.
“Trump is certainly doing his negotiating team no favors by undercutting them in public,” said Eswar Prasad, a trade expert and the former head of the China division of the International Monetary Fund. 

The president’s actions, he said, “weakens rather than fortifies Lighthizer’s leverage.”
On Wednesday, Mr. Lighthizer will testify before House lawmakers, where he will have to credibly defend a pact that is shaping up to be less ambitious than he might have hoped.
Mr. Lighthizer has publicly expressed solidarity with Trump’s goals, and those who know him say he remains loyal to Trump. 

In private, however, he has been frustrated by Trump’s superficial understanding of the trading relationship with China and his tendency to jump unpredictably into the fray.
American and Chinese negotiators have wrestled over trade terms in rounds of talks over the past year, including in Washington last week. 

Chinese negotiators have largely repackaged old promises about opening their markets to foreign companies and offered large purchases of American products that are designed to impress a president who is focused on reducing the bilateral trade deficit.
The Chinese have so far declined to make the concrete commitments to reform their economy that the administration has demanded, including ending China’s practice of subsidizing companies, engaging in cybertheft and forcing American companies to hand over intellectual property to Chinese partners in order to do business there.
Trump continues to insist that any deal with China will end “unfair” trade practices, including what he has said is theft of American technology and intellectual property. 

And negotiators are trying to insert an enforcement mechanism into any deal that would require China to return to the bargaining table if it fails to make these structural changes, a person familiar with the talks said.
But the hardened position that prompted Trump’s unprecedented imposition of sweeping tariffs on Chinese goods appears to be weakening, giving Beijing more room to maneuver and undermining Mr. Lighthizer’s goal.
On Sunday, citing “substantial progress” in trade talks, Trump backed off his March 1 deadline to impose higher tariffs on $200 billion worth of Chinese goods. 

That date had been described by Mr. Lighthizer in December as a “hard deadline” and was viewed as critical to getting Beijing to agree to significant changes since its economy, already hurting from tariffs, would suffer more from higher levies.
Last week, Trump contradicted Mr. Lighthizer by lumping the fate of Huawei, the Chinese telecom giant facing criminal charges, in with the trade talks. 

Mr. Lighthizer had insisted that Huawei was “entirely a criminal justice matter” and that it had “nothing to do with anything I’m working on.” 

But on Friday, when asked whether criminal charges against Huawei could be dropped as part of an agreement, Trump said: “We’ll be talking to the U.S. attorneys. We’ll be talking to the attorney general. We’ll be making that decision.”
“His intervention has now ratcheted up the pressure on both sets of negotiators to find a path to an agreement in the coming weeks, even if the result should be a narrow and short-lived agreement,” Mr. Prasad said.
The differences between the two men mounted on Friday, as they shared a remarkable exchange in front of the press and the Chinese delegation over whether to call the current trade agreement a memorandum of understanding, or M.O.U., as Mr. Lighthizer had been doing.
“I don’t like M.O.U.s because they don’t mean anything,” Trump told Mr. Lighthizer. 

“I think you’re better off just going into a document. I was never a fan of an M.O.U.”
Mr. Lighthizer interjected to explain that, in trade negotiations, an M.O.U. is a typical term for a detailed contract between two parties.
“It’s just called a memorandum of understanding,” he said. 

“That’s a legal term.”
Trump, seemingly unhappy with being contradicted, cut back in.
“By the way, I disagree,” the president said. 

“I think that a memorandum of understanding is not a contract to the extent that we want.”
“To me, the final contract is really the thing, Bob — and I think you mean that, too — is really the thing that means something,” the president added.
Mr. Lighthizer quickly reversed course. 

“From now on, we’re not using the word memorandum of understanding anymore,” he told Trump and his Chinese counterparts. 

“We’ll have the same document. It’s going to be called a trade agreement. We’re never going to use M.O.U. again.”
“I like that much better,” Trump said.
By Sunday night, the president seemed eager to heal any rift. 

Speaking from a dinner at the White House, the president commended Mr. Lighthizer for working around the clock to secure a deal with China.
“When I was able to be lucky enough to win the presidency, I called Bob Lighthizer, because for years people have known he’s the greatest trader that we have on this type of trade — we have many different types of trade — and I really understand now why,” the president said.
With the Chinese now making only vague concessions on structural reforms, Mr. Lighthizer would prefer to stay tough and let the bite of American tariffs persuade them to make bigger promises. While he has shared with Trump the view that the Chinese are not ready to make significant concessions, the president has continued to press for a deal.
Jeff Emerson, a spokesman for the United States trade representative, denied that Mr. Lighthizer had ever been frustrated with the president, saying that he and Trump were in complete agreement on the negotiating strategy with China.
“Trump has never insisted that Ambassador Lighthizer make a deal with China and has instead told Ambassador Lighthizer he is interested only in making a ‘great deal’ with China that addresses structural issues,” Mr. Emerson added. 

“Anyone claiming otherwise either does not know what they are talking about or is deliberately pushing falsehoods.”
Mr. Lighthizer is well respected in Washington, with decades of experience in private legal practice and government, including leading trade talks with Japan in the 1980s. 

In trying to pin down the Chinese on making ambitious reforms to their economy, he has an unenviable task.
Business groups and China watchers credit the Trump administration with forcing China to finally come to the table and address longstanding concerns, including its treatment of American companies. 

And they say the administration is poised to secure greater concessions than previous administrations have.
“Bob Lighthizer has made it a priority to get this China deal right,” said Myron Brilliant, an executive vice president and the head of international affairs at the U.S. Chamber of Commerce. 

“He understands that this is the moment in time in which there’s an opportunity to make a real change in the trajectory of the U.S.-China relationship, and he’s focused on the bottom line: what he can get from the Chinese that will improve the U.S.-China economic relationship.”
Mr. Lighthizer, who will testify before the House Ways and Means Committee, is expected to face tough questions from lawmakers about the state of the negotiations and whether he feels comfortable staking his legacy on the evolving China deal. 

While many Republicans are eager for the trade war to end, they are warning the administration not to settle for a weak deal. 

Democrats are already trying to outflank Trump on China and are gearing up to call any agreement that does not include structural changes a failure.
Mr. Lighthizer and other members of his office have held discussions with politicians and trade advisers of both parties, urging them to maintain their public pressure to get a substantial deal.
In a statement Monday, Daniel DiMicco, Trump’s trade adviser during the campaign and the chairman of trade group the Coalition for a Prosperous America, urged Trump to “continue his strategy of strength and leverage in the U.S. trade and geopolitical relationship with China” and to “resist short-term pressure from Wall Street.”
Senator Marco Rubio, Republican of Florida, urged Trump not to cave, saying in a tweet, “No matter how many tons of soybeans they buy if #China gets to keep cheating & stealing trade secrets it won’t be a good deal for America, our workers or our national security.”
Mr. Lighthizer, a former steel industry lawyer who grew up watching factories disappear from his native Ohio, took the trade representative job in large part to shift power away from China and toward the United States. 

Mr. Lighthizer has long viewed China as an economic enemy that has engaged in unfair trade practices, destroying American industries in the process.
The potential for Trump to reach a compromise deal with China has prompted speculation in Washington that Mr. Lighthizer, like so many other administration officials, might resign. 

But while Mr. Lighthizer views changing the China dynamic as critical, his confidantes say he is unlikely to leave given his unprecedented opportunity to improve America’s terms of trade with Canada, Mexico and the European Union, as well as at the World Trade Organization.
Mr. Emerson said rumors of Mr. Lighthizer’s resignation were “a total falsehood."
Mr. Lighthizer “believes Trump is the greatest trade president in our history and is honored to help him,” Mr. Emerson said.

Ideological soulmates: How a China skeptic sold Trump on a trade war

Robert Lighthizer went to the White House in 2017 to lay out his rationale for confronting Beijing. Now, he is in charge of executing it.

By ANDREW RESTUCCIA and MEGAN CASSELLA

Robert Lighthizer thought it was time for a history lesson.
It was mid-2017, and President Donald Trump — who had campaigned on a vow to bully China into changing its trade practices — had so far taken little concrete action against the Asian power since taking office earlier that year.
So Lighthizer, the United States trade representative and a decades-long skeptic of Beijing, commandeered one of the White House’s weekly trade policy meetings, delivering a meticulous presentation to his colleagues about the decades-long failure of U.S. policy toward Beijing.
Surrounded by Cabinet secretaries and senior advisers to the president, Lighthizer stood at the end of a long table in the Roosevelt Room and ticked through the economic dialogues with the Chinese that past presidents hoped would fundamentally change the trade dynamic between the two economic superpowers — but ultimately, in his view, yielded little progress.
Then, a few weeks later, Lighthizer took the exact same message to Trump in the Oval Office.
Though Lighthizer didn’t outline a detailed policy proposal during his presentations, the implication was clear, according to a person with knowledge of the episode: After years of talk, the United States needed to take a much more aggressive approach to combating China’s trade practices, which unfairly advantaged Chinese firms at the expense of American workers.
The message resonated with a president who was already inclined to take a hard line on China.
Trump signed an executive order late that summer giving Lighthizer the authority to “consider all available options” and explore ways to confront Beijing over its handling of technology and intellectual property.
And in January, Trump slapped the first in a series of hefty tariffs on China, launching a trade war that he vows will force the country to change its behavior.
For Lighthizer, a veteran Washington trade attorney who at 71 years old now oversees the president’s expansive trade ambitions, Trump’s decision to challenge China capped a career spent trying to convince Washington elites of Beijing’s underhanded economic intentions.
And it cemented a bond with Trump that even prompted the president to briefly consider Lighthizer to be his next chief of staff.
Now, nearly a year and a half after he went to the White House to lay out his rationale for confronting Beijing, Lighthizer is in charge of executing it.
Earlier this month, Trump tapped the trade representative to lead his administration’s latest — and most crucial — round of negotiations with China.
Failure could drive the two countries even deeper into a trade war, further destabilizing the world economy and possibly rupturing ties between two superpowers already at odds over Beijing’s military activity in the South China Sea, its aggressive investment practices in developing countries and its alleged rampant theft of American intellectual property. 
Politically, Trump has also made the negotiations with China one of his top policy priorities, meaning his 2020 reelection chances could hinge in part on the outcome of the Lighthizer-led discussions.
In other words, the stakes couldn’t be higher.

Despite their starkly different personalities and approaches, Lighthizer and Trump are — in the words of one former senior administration official — “ideological soulmates” on trade. 

Despite their starkly different personalities and approaches, Trump and Lighthizer are — in the words of one former senior administration official — “ideological soulmates” on trade.
They are both deeply skeptical of multilateral institutions like the World Trade Organization, favor bilateral agreements over massive trade deals and are eager to use punitive measures like tariffs and trade restrictions to get their way.
But on a more personal level, the two men appear to have little in common.
Lighthizer grew up in Ashtabula, Ohio, in the heart of the Rust Belt and a world away from Trump’s childhood home of New York City.
He’s an avid history buff and hunter, who keeps a replica of a Revolutionary War-era ship in his office and used to have a mounted elk head on the wall in his living room — a jarring contrast to Trump’s gold-plated apartments.
And Lighthizer has long been meticulous about health and fitness, at one point getting into the habit of drinking scalding cups of hot water in the mornings, rather than coffee or tea.
Trump, meanwhile, rarely exercises and is known for eating fast food, swilling Diet Cokes and ordering his steaks well-done.
Still, Trump has grown to like and trust Lighthizer, according to White House officials.
The president believes Lighthizer is an expert negotiator, a high compliment from a man who considers himself to be the ultimate dealmaker and once wrote that he’d name himself trade representative if he ever became president.
“You’ve got the art of the deal — and with him you’ve got the art of the trade deal,” said Larry Kudlow, Trump’s top White House economic adviser, of Lighthizer.
Trump tends to favor people who fall neatly into archetypes.
He often describes favored advisers as “straight out of central casting.”
Lighthizer, White House officials noted, looks the part of a grizzled veteran of trade negotiations and that’s helped him win Trump’s trust.
As he faces mounting outside criticism for his trade policies, the president has started privately referencing the 1888 presidential election, in which tariffs became a decisive issue, according to an administration official.
When Democratic President Grover Cleveland called for lowering tariffs, his challenger, Republican Benjamin Harrison, pounced, arguing that maintaining high tariffs was the key to economic prosperity.
In the end, the public sided with Harrison and Cleveland lost the presidency.
The episode has become a parable for Trump that bolsters his position that tariffs are a political winner.
While it’s unclear who put the 1888 presidential election on Trump’s radar, some in the White House suspect it was the history-loving Lighthizer, who has long touted the utility of tariffs.
Unlike other Trump advisers, Lighthizer has largely avoided getting drawn into the behind-the-scenes fights that so often spill into public view in this administration.
Current and former administration officials said he’s worked to stay on Trump’s good side.
He is deeply skeptical of reporters and avoids doing interviews unless the White House encourages him to do them.
A USTR spokesman did not respond to repeated requests for an interview with Lighthizer for this story.
“He knows there’s an audience of one and he never steps off script. Everything that he says is said knowing that Trump is watching,” said a Washington trade lawyer, who declined to speak on the record because he didn’t want to anger Lighthizer.
Lighthizer can also be short-tempered, and he’s been known to lose his patience during negotiations, throwing out arcane references to trade law to outsmart his opponents.
One former White House official described him as a “grumpy old man.”
Still, his success in renegotiating America’s three-country trade deal with Mexico and Canada, as well as revising a trade deal with South Korea, has won him allies in the administration, even among the many officials who disagree with him.
That sets him apart from White House trade adviser Peter Navarro, whose policy stances align with Lighthizer’s but who has clashed with senior aides.
“Even those who disagree with his substantive approach respect Bob’s deep legal knowledge and unwavering professionalism,” said former White House staff secretary Rob Porter, who oversaw the administration’s internal trade discussions until he resigned earlier this year.
The renegotiation of the new U.S.-Mexico-Canada deal, formerly known as NAFTA, was among Lighthizer’s first tests as trade representative, and Trump wanted it done as soon as possible.
In more than a year of talks with Canada and Mexico, Lighthizer combined a “my way or the highway” attitude with a thorough understanding of policy minutiae that he used to win concessions from his counterparts, according to people familiar with the intense negotiations.
At one point this spring, as negotiators were racing to conclude talks before a late May deadline they ultimately missed, Lighthizer began to grow visibly frustrated with what he viewed as a lack of flexibility from the other countries.
Mexico had prepared a document with a series of bullet points offering ideas for changes to make to the chapter at hand, and Lighthizer, unsatisfied with the ideas presented, responded during the next session with a typed-up, bulleted list of his own.
But instead of fresh ideas, typed next to each bullet point were the same words: “This is not a proposal.”
“It was very funny in a dark, dry way,” said a former high-ranking official involved in the NAFTA talks, who was present at the meeting.
“He was like a small kid that just played a prank on someone, and it worked.”
While Lighthizer did cinch the deal, some critics have said the revised NAFTA amounts to little more than a slight update of the original accord — not an overhauled agreement as the Trump administration has portrayed it.
Lighthizer’s tough negotiating style, and his focus on protecting America’s core industries from foreign imports, has long been well-known in Washington, where he went to college and law school and spent his four-decade career before joining the Trump administration.
As a young lawyer, Lighthizer worked for the Senate Finance Committee before joining the Reagan administration as a deputy U.S. trade representative, where he helped negotiate “voluntary restraint” agreements with trading partners to limit U.S. imports of cars, semiconductors and other goods.
He then spent years as an attorney at the law firm Skadden, Arps, Slate, Meagher & Flom, largely focused on defending the U.S. steel industry from subsidization by foreign countries, including China, and illegal dumping.
That background has prompted some criticism of Lighthizer and his allies from detractors who say they have acted too brashly to help the steel industry at the expense of U.S. businesses and the broader American economy — particularly as they imposed tariffs on metals imports that prompted widespread retaliation from countries across the globe.
In recent years, Lighthizer was winding down his career, spending more time with his three grandchildren and at his condo in Palm Beach, Florida — which sits just a few miles from Trump’s Mar-a-Lago club — when he was approached by Dan DiMicco, a longtime friend and former steel industry executive who was working on Trump’s transition team.
DiMicco initially convinced Lighthizer to help with the transition.
Then he later recommended Lighthizer for the USTR job, casting him as a world-class negotiator who could help the president fulfill his campaign promises.
Lighthizer appeared to be already familiar with, and supportive of, Trump’s trade views.
In 2011, he penned an op-ed for the Washington Times defending Trump — who was toying with the idea of a presidential campaign — against what he believed was unfair criticism that the reality show star was “liberal on trade.”
He argued instead that trade-restrictive policies and toughness toward China were inherently conservative ideas.
“Given the current financial crisis and the widespread belief that the 21st century will belong to China, is free trade really making global markets more efficient?” he wrote, presenting a challenge to traditional Republican free-trade orthodoxy.
“If Mr. Trump’s potential campaign does nothing more than force a real debate on those questions, it will have done a service to both the Republican Party and the country.”
Lighthizer’s views make him arguably the most protectionist trade representative in recent memory. His predecessors focused largely on pushing for open markets and fewer trade barriers, not more. Often, these negotiations served more of a geopolitical purpose than an economic one.
“Bob is an outlier,” said former Florida Rep. James Bacchus, the former chairman of the World Trade Organization’s highest court, the Appellate Body.
Bacchus has strongly criticized Lighthizer’s policies, including his recent decision to block the appointment of new judges to the WTO.
But Lighthizer has been unapologetic about his views, even penning a New York Times op-ed years ago on “the venerable history of protectionism.”
He has defended his position as the only way to protect America’s future, and he, like his boss, often says that short-term pain felt by farmers and manufacturers will be worth the long-term payoff.
"If your conclusion is that China taking over all of our technology and the future of our children is a stupid fight, then you are right, we should capitulate," Lighthizer told lawmakers earlier this year, when they criticized the administration’s trade policies for the pain they have caused export-dependent industries.
"My view is that's how we got where we are. I don't think it's a stupid fight."
As point-man on the China talks, Lighthizer is taking over a role previously held by Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, neither of whom managed to convince Beijing into making the type of sweeping structural changes that the U.S. has long wanted, including commitments from Beijing to buy more U.S. products, fewer restrictions on American firms entering the Chinese market and a reduction in the pilfering of American trade secrets.
The high-pressure job comes with huge risks — and if Lighthizer fails, his relationship with Trump could go down the tubes.
But people close to Lighthizer say he believes he has little to lose, in part because his current job is likely the last one of his career.
“He isn’t looking to move up the ladder after this job,” one White House official said.
And if he succeeds, he has the opportunity to end his career having fulfilled a primary goal he has held since he started it.
When he sat before the Senate Finance Committee as part of a confirmation hearing for his first appointment to USTR in 1983, Lighthizer was instructed by then-Sen. Max Baucus (D-Mont.) to be sure never to forget to put America’s interests first, a prophetic echo of the philosophy that has come to define Trump’s presidency.
“If at any time it appears that I lose consciousness of the fact that I am there representing this committee and this country, I hope that someone points it out to me,” responded Lighthizer, then 35 years old.
“I don’t expect to fall into that trap.”

Rogue Nation

China has not altered predatory trade practices
BBC News

The Trump administration has accused China of not changing its unfair practices, inflaming a trade dispute between the world's two largest economies.
In an update to a March report, the US said China had failed to alter its unreasonable practices.
The US has, along with other countries, long criticised Beijing over its trade policies.
The move raises tensions ahead of a high-stakes leaders meeting this month.
US President Donald Trump and Chinese dictator Xi Jinping are due to meet on the sidelines of the G20 summit in Argentina. 

Their meeting will be closely watched for any progress on resolving the bitter trade dispute.

'Strengthened monitoring'
"China has not fundamentally altered its unfair, unreasonable, and market-distorting practices," US Trade Representative (USTR) Robert Lighthizer said in a statement on Tuesday.
The findings are part of an investigation into Beijing's intellectual property and technology transfer practices, which has prompted tariffs on billions of dollars worth of Chinese goods.
Mr Lighthizer said the updated report was part of the Trump administration's "strengthened monitoring and enforcement effort".I
The report said despite the relaxation of some foreign ownership restrictions, "the Chinese have persisted in using foreign investment restrictions to require or pressure the transfer of technology from US companies to Chinese entities".
So far, the US has imposed three rounds of tariffs on Chinese goods, totalling more than $250bn (£195.5bn).
Beijing has struck back. 

It's accused the US of starting "the largest trade war in economic history" and imposed tariffs on $110bn worth of American goods.
For the first time in its history, an Asian economic summit last weekend failed to conclude with a joint leaders statement because of US-China divisions over trade.
At the meeting, US Vice-President Mike Pence said he was prepared to "more than double" the tariffs imposed on Chinese goods.

Trade War

President Trump Advisers Urge Raising Additional China Tariffs to 25%
By Bob Davis and Lingling Wei

A worker checks wind turbine blades at a factory in Lianyungang, China.

As Washington and Beijing struggle to break a trade impasse, administration advisers are urging President Trump to raise the stakes with a sharp increase in the level of tariffs proposed for $200 billion in Chinese imports targeted for punitive measures.
Trump administration advisers are debating measures that might bring Chinese negotiators to the table. 

They are pushing the president to apply tariffs as high as 25% on $200 billion of Chinese imports, up from an original proposal for 10%.
The White House won’t make a final decision until at least late August on those tariffs, which are likely to target consumer goods and food as well as machinery components. 

Advisers are justifying the steeper tariffs, in part, to make up for the rapid depreciation of the yuan in recent months. 

Since May 30, the yuan has fallen 6% against the dollar.
“Once you go down the road of using tariffs to disrupt the Chinese, you have to say 25% compared to 10%,” said Derek Scissors, a China expert at the American Enterprise Institute who advises the administration on trade.
The U.S. has already imposed 25% tariffs on $34 billion worth of Chinese imports and is on schedule to levy similar tariffs on an additional $16 billion of goods, probably this week or next.
The additional $200 billion would be the next step, should the U.S. make good on Mr. Trump’s threat to ratchet up pressure and, if needed, impose tariffs on all $505 billion in goods China ships to the U.S. should negotiations fail to reach a favorable outcome.
The debate over tariff levels comes as Washington has yet to make meaningful progress in settling its market-rattling trade dispute with Beijing. 

Treasury Secretary Steven Mnuchin and Chinese envoy Liu He and their staffs continue to talk about a possible meeting, said officials in both capitals, but the talks remain at a very preliminary stage.
Both sides argue that it is up to the other to make the first move after several preliminary Chinese offers, mainly involving the purchase of more U.S. goods, were rejected by Mr. Trump as inadequate.
The two sides have agreed that their initial offers weren’t a solid base for further negotiations, according to a senior member of the U.S. business community tracking the discussions. 

Those included the Chinese offering mainly to buy U.S. goods, and the U.S. demanding that China essentially scrap the industrial policy that turned it into an economic powerhouse, the senior executive said.
“They are discarding useless ideas and rhetoric,” the executive said. 

“They are figuring out what could be on an agenda and what could be a solution.”
Mr. Mnuchin said at Group of 20 meeting last week in Buenos Aires that he and members of the Chinese delegation engaged in “chitchat.”
Some pro-China hands have been urging a resumption of talks and been working with Washington and Beijing to get the discussions started. 

They include former Treasury Secretary Hank Paulson, who was Mr. Mnuchin’s boss at Goldman Sachs Group Inc., and Blackstone Group LP Chief Executive Stephen Schwarzman, said people familiar with the efforts.
The administration believes it strengthened its hand last week with a tentative trade accord with the European Union. 

The two sides agreed to use the World Trade Organization to deal with intellectual-property theft, government pressure on companies to transfer technology and the operation of state-owned industries—all code words for trade infractions by Beijing.
With the agreement, China is “in a very difficult position,” Lawrence Kudlow, director of the National Economic Council, said Sunday on CBS. 

“China is, I think, being isolated.”
Whatever gains the U.S. might have made with Europe, however, haven’t eased the trade fight with Beijing. 

China presses U.S. companies to hand over valuable technology and uses unfair trade practices to produce an enormous trade surplus with the U.S.
The Trump administration remains deeply divided over how best to deal with the Chinese, and the two main factions are moving in different directions. 

China trade realists, led by U.S. Trade Representative Robert Lighthizer, believe China will make concessions only if it feels the brunt of heavy tariffs.
Trade doves, led by Messrs. Mnuchin and Kudlow, have been looking for a solution short of massive tariffs.

Mr. Mnuchin and Liu have continued to discuss U.S. China relations, but some of those conversations have gone poorly.
In one indication of the strain between the two countries, Qualcomm Inc. last week had to scuttle its agreement to purchase Dutch company NXP Semiconductors NV after China didn’t give the deal the green light. 

Days earlier, Mr. Mnuchin called Liu to lobby for its approval, according to people familiar with the matter. 

Mr. Mnuchin didn’t believe the call had gone well, the people said.
The Chinese decision was a blow to Mr. Trump, who had worked to reduce U.S. penalties on Chinese telecomm giant ZTE Corp., which was accused of violating U.S. sanctions against Iran and North Korea. 

Some U.S. government and industry officials had naively expected the ZTE efforts would prompt China to reciprocate and approve the Qualcomm-NXP deal.
Previous negotiations have led the Chinese to be skeptical Mr. Mnuchin can deliver a trade deal. 

Liu had proposed to buy nearly $70 billion of U.S. farm, energy and other products last month, which Beijing thought went a long way to meet Mr. Trump’s demand to cut the bilateral trade deficit by $200 billion. 

But Mr. Trump rejected that proposal. 

“The two sides just keep talking past each other,” said a person familiar with the discussions.
The scale of the U.S. tariff offensive has Beijing on edge. 

The Chinese leadership is dealing with economic headwinds, including weakening investment and household consumption, as well as rising corporate defaults. 

The trade tensions threaten to put growth further at risk.
Beijing, however, has been preparing for a long fight. 

On Tuesday, Xi Jinping oversaw a high-level meeting that signaled a shift in economic priorities toward supporting growth through means such as debt control. 

The meeting laid out a range of pro-growth measures, such as greater spending on infrastructure and easier credit for banks and businesses.
Chinese officials have also been weighing how far to press the pledged retaliation against the U.S. on trade without hurting other national interests. 

Measures being rolled out so far include holding up licenses for U.S. businesses, delaying approval of mergers and acquisitions involving U.S. companies, and ramping up inspections of American products at China’s borders.
Beijing is also wary of pushing so far as to cause U.S. businesses to leave China—which could be a blow to Beijing’s effort to attract foreign capital and keep its citizens employed at a time of growing economic contraction.

President Trump Is Great Again

President Donald Trump approves tariffs on $50 billion worth of Chinese goods

By Pamela Brown and Julia Horowitz


President Donald Trump has given his approval for the United States to put tariffs on $50 billion of Chinese exports, according to a source with knowledge of the situation.
An official announcement is expected on Friday. 

The president's green light came after a meeting Thursday with top economic officials, including Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and US Trade Representative Robert Lighthizer.
The move represents a serious escalation of trade tensions between the world's two largest economies.
It was first reported by Bloomberg.
Beijing previously said it would respond to American tariffs on $50 billion worth of Chinese exports with retaliatory tariffs on $50 billion of US products such as cars, planes and soybeans.
For months, President Trump has slow-walked threats of tariffs against China as punishment for intellectual property theft.
He first announced that the United States would impose trade penalties on about $50 billion of Chinese goods in March.
"We have a tremendous intellectual property theft problem," President Trump said at the time. "It's going to make us a much stronger, much richer nation."
After China warned it would retaliate, Trump threatened tariffs on a further $100 billion of Chinese products.
In mid-May, both sides announced a ceasefire after two rounds of trade negotiations.
The countries said in a joint statement that China would "significantly increase" purchases of US agricultural and energy products to reduce the trade imbalance, a top Trump administration demand. Mnuchin subsequently declared the trade war "on hold."
Ten days later, the White House abruptly said it would proceed with the tariffs, along with new limits on Chinese investments in the United States.
The Trump administration said it would finalize the list of goods that would be subject to 25% tariffs by June 15, and that the tariffs would go into effect "shortly thereafter." 

An initial list, which including items ranging from artificial teeth to flamethrowers, was released at the beginning of April.
A further round of trade talks in Beijing earlier this month failed to yield any breakthroughs. 

And the Chinese government warned then it wouldn't honor its pledge to increase purchases of US goods if tariffs were imposed.
The Trump administration last week cut a deal with Chinese telecommunications firm ZTE to end a crippling ban that prevented the company from buying American parts. 

ZTE's fate had become entwined in the trade talks. 

But the agreement to save the company has faced resistance from lawmakers in Congress, who argue the ban should stay in place because ZTE poses a security threat.
President Trump's decision to move forward with tariffs on China follows his recent imposition of steep tariffs on steel and aluminum imports from Canada, Mexico and the European Union on national security grounds.

The Art of the Capitulation

It’s been amateur hour on China negotiations

By Catherine Rampell

The Trump administration is supposed to be negotiating with China. 

But right now it more often seems to be negotiating with itself.
China knows what it wants out of these bilateral negotiations; the White House plainly does not. 

Trump officials have offered shifting and at times contradictory demands and objectives, further complicated by administration infighting, public turf wars, reversals, retractions and clumsy errors.
In short: Over here on Team USA, it’s been amateur hour.
On Friday, for instance, National Economic Council Director Larry Kudlow told reporters that China had offered to reduce the U.S. trade deficit by “at least” $200 billion.
That would be an astonishing figure, as it would comprise more than half of our entire goods deficit with China.
Not surprisingly, the Chinese foreign ministry spokesman flatly denied that China had offered this number. 

And the next day, when the White House released its joint communique with China on the negotiations, the statement mentioned only “a consensus on taking effective measures to substantially reduce the United States trade deficit in goods with China.”
No actual figures were included, certainly not $200 billion.
So how did Kudlow respond when confronted with these developments?
On ABC’s “This Week,” he denied that he’d ever touted an agreement on the $200 billion figure, saying that it was just “a number that interests the president a lot.”
This is hardly the only time the administration has been confused about the facts, or its own position.
On Sunday, Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer offered somewhat mixed messages on what was expected to happen with tariffs going forward. Mnuchin said the United States was “putting the trade war on hold”; Lighthizer emphasized that tariffs remain on the table.
In Beijing earlier this month, divisions between the free-trader and protectionist wings of the U.S. delegation exploded, with the White House trade adviser Peter Navarro shouting and cursing at Mnuchin after being excluded from a meeting.
Trump himself is not exactly helping to make the administration’s message more coherent.
A month ago, the Commerce Department imposed harsh penalties on Chinese telecom giant ZTE, which U.S. officials determined had not complied with a previous settlement over illicit sales to Iran and North Korea. 

Trump’s FBI director, the nation’s top counterintelligence official and the Defense Department have likewise warned that ZTE phones may pose a cybersecurity threat.
But then this past week, Trump bizarrely declared that he was hoping to reverse these U.S. actions. “Too many jobs in China lost,” Trump tweeted. 

“Commerce Department has been instructed to get it done!”
In subsequent days, Trump and his underlings have offered muddled and at times contradictory guidance about the motivation behind this change of heart, and what actual policy adjustments it might entail.
More broadly, this administration often doesn’t seem to realize that its stated goals regarding China are at some level schizophrenic, if not mutually exclusive.
The administration has said it wants better investment terms for U.S. companies in China, for instance, which means that U.S. multinational companies would be more likely to move more of their supply chains to China. 

It would also lead more capital to flow from the United States to China. 

As the Financial Times’s Lucy Hornby points out, these developments would be at odds with Trump’s goal of reducing our goods trade deficit with China.
So why can’t the administration get its act together? 

Why do officials keep publicly undermining themselves and their colleagues?
At core, the problem is that Trump’s trade agenda is deeply confused, which enables cacophony and cattiness.
During the 2016 election, Trump was obsessed with the idea that our trade deals were “unfair,” part of his broader campaign message attempting to scapegoat foreigners for all the nation’s ills.
Trump’s evidence was that we had a big trade deficit, which meant we were “losing.” 

All Trump understood was that voters liked the story he was telling. 

So rather than taking the time to learn about our actual complaints regarding China’s trade policy (primarily, intellectual property theft), or how we could deal with them (through multilateral pressure, such as the Trans-Pacific Partnership that Trump killed), Trump fixated on deficits. 

The part of the story that sold with the public.
Meanwhile, the people in charge of executing Trump’s trade policy became prisoners of Trump’s fairy tale, doomed to try to solve a problem that doesn’t exist rather than the one that does.

China gave Trump a list of crazy demands, and he caved to one of them

By Josh Rogin 

Trump's scattershot economic policy has surrendered the world stage to China: Trump welcomes Xi Jinping in April 2017 at Mar-a-Lago in Palm Beach, Fla. 

After top Trump officials went to Beijing last month, the Chinese government wrote up a document with a list of economic and trade demands that ranged from the reasonable to the ridiculous. 

On Sunday, Trump caved to one of those demands before the next round of negotiations even starts, undermining his own objectives for no visible gain.
The Chinese proposal is entitled, “Framework Arrangement on Promoting Balanced Development on Bilateral Trade,” and I obtained an English version of the document, which is the Chinese government’s negotiating position heading into the next round of talks. 

That round begins this week when Xi Jinping’s special economic envoy Liu He returns to town.
Bullet point 5 is entitled, “Appropriately handling the ZTE case to secure global supply chain.”
“Having noted China’s great concern about the case of ZTE, the U.S. will listen attentively to ZTE’s plea, consider the progress and efforts ZTE has made in compliance management and announce adjustment to the export ban,” the document states.
Trump took a big step in that direction Sunday when he tweeted that he had instructed the Commerce Department to help get ZTE “back into business, fast,” only weeks after the Commerce Department cut off its supply of American components because it violated U.S. sanctions on sales to North Korea and Iran. 

Trump’s tweet set off a panic both inside and outside the administration among those who worry that Trump is backing down from his key campaign promise to stand up to China’s unfair trade practices and economic aggression.
As Sen. Marco Rubio (R-Fla.) pointed out Monday, the problems with ZTE go well beyond sanctions-busting. 

The Federal Communications Commission has proposed cutting ZTE and other Chinese “national champion” companies off from U.S. infrastructure development funds because the U.S. intelligence community views their technology as a national security risk.
White House spokeswoman Lindsay Walters issued a rare tweet clarification, explaining that Trump wanted Commerce Secretary Wilbur Ross to “exercise his independent judgment” to resolve the ZTE case “based on its facts.” 

Ross told the National Press Club on Monday that the ZTE restrictions are “separate from trade.” Still, Ross added, he is looking at “alternative remedies” for ZTE and expects to find some “very, very promptly.”
What the heck happened here? 

Some officials believe that the camp of Trump officials trying to avoid a trade war with China — led by Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow — are winning the never-ending battle for the president’s limited attention. 

Mnuchin is trying to control the China negotiations and elbow out U.S. Trade Representative Robert Lighthizer and Office of Trade and Manufacturing Policy Director Peter Navarro.
My Washington Post colleagues reported that Trump may have gotten ahead of a brewing “mini-deal” whereby the United States provides relief for ZTE and, in return, China eases its restrictions on U.S. agricultural imports. 

If that’s the case, the Trump administration “just got blackmailed,” according to Derek Scissors, resident scholar at the American Enterprise Institute.
“Our actions against ZTE might have been excessive, but what you can’t do is say, ‘Just kidding’ when the Chinese start complaining about it,” he said. 

“The idea that we did it and then reversed ourselves is awful.”
As I’ve written before, a short-term deal would a penny-wise, pound-foolish approach, because confronting China’s large-scale unfair and illegal practices should be an urgent strategic priority. 

The United States gets one shot to show China that we are serious about forcing it to change its behavior — and, if it won’t, that we are serious about defending ourselves.
Trump is signaling he’s willing to give up the one piece of leverage that is actually getting the Chinese government’s attention before receiving anything concrete in return. 

That’s not only bad negotiating. 

It also sends the message that the United States doesn’t have the stomach for the larger economic battles with China to come.
Nobody knows whether Trump will approve whatever “deal” Mnuchin and company put on his desk after the next round of talks. 

Trump may change his mind again. 

But here are some of the other demands in China’s proposal, to watch out for on Trump’s Twitter feed:

• The United States commits to eliminating the sanctions imposed after China’s crackdown on protesters in Tiananmen Square in 1989
• The United States relaxes export restrictions on technology such as integrated circuits
• The United States allows U.S. government agencies to purchase and use Chinese information technology products and services
• The United States agrees to treat Chinese investment and investors equally to those from other countries and place no restrictions on Chinese investment
• The United States agrees to ensure Chinese businesses can participate in U.S. infrastructure projects
• The United States agrees to strengthen protection of Chinese intellectual property. (Seriously!)
• The United States agrees to drop its anti-dumping cases against China at the World Trade Organization
• The United States agrees to terminate its investigations into Chinese intellectual property theft and not impose any of the sanctions Trump already announced

“They expect to be treated the same way our treaty allies are treated, which is ridiculous,” Scissors said. 

The demands in the document are crazy, he said, “But we actually accepted one of China’s crazy demands.”
If Trump concedes to Beijing’s other demands, he would be declaring the United States’ surrender in the economic struggle against China before the fight really begins. 

Trump administration officials are now saying that won’t happen. 

But Trump’s unforced error on ZTE undermines the entire effort.