Despite Tough Talk on Trade, Trump Could Seek a Truce With Xi Jinping at G-20

President Trump will meet Chinese President Xi Jinping at the G20 summit this weekend in Buenos Aires.

President Trump plans a steel facade as he prepares for a critical meeting on trade this weekend with Chinese President Xi Jinping. But behind their harsh conversation and the threats of higher tariffs, there is a worrying concern about the costs of a prolonged trade war on the financial markets and the economy in general.

This could lay the groundwork for a truce between the United States and China, said several US officials, in the form of an agreement that would delay new tariffs by several months, while the two largest economies are trying to solve the problems divide them. .

Such a result is not sure. The administration officials expressed their deep disappointment at China's reaction to Trump's pressure so far, calling it a list of Chinese-language proposals that they would do little to end the situation. theft of American technology by part of China or to tackle its other predatory business practices.

But Trump has announced a new willingness to reach an agreement with Xi, leader he has treated with concern and will meet Saturday in Buenos Aires for dinner, at the end of the summit leaders group of 20 industrialized countries. .

The stock market's ups and downs, interest rate hikes and thousands of layoffs announced this week by General Motors shook Trump, officials said, signaling his desire to leave his luncheon with Xi with something you can claim A victory.

"We have a good chance of reaching an agreement and he is ready to do so," said Trump's senior economic advisor, Larry Kudlow, on Tuesday. But if the meeting did not result in a breakthrough, Mr. Trump was "perfectly happy to maintain his pricing policy."

To date, the administration plans to raise existing tariffs on Chinese products worth $ 250 billion on 25 January from 25% to 25%. Trump also threatened to impose additional tariffs on $ 267 billion worth of Chinese products. Many fears would plunge the two giants into an economic cold war in its own right.

However, if both leaders agreed to speak, officials said Trump would likely postpone the increase to 25 percent and refrain from any new rights. This would look like an agreement he signed last July with the European Union, in which he agreed to postpone car fares in return for a commitment from Europe to buy soybeans and natural gas from the United States. United.

Divisions within the West Wing about trade are still fierce, as they have been since the beginning of Mr. Trump's presidency, and the quarrel around Mr. Trump's ear will likely continue until the moment where he will meet Mr. Xi in Argentina.

Other general advisers, such as Mr Kudlow, and Treasury Secretary Steven Mnuchin urge him to compromise, while some radical supporters, such as Peter Navarro, director of the White House's trade office, say that the pressure on China has even faded.

"We have a good chance of reaching an agreement," Larry Kudlow, Trump's senior economic adviser, said Tuesday.

Mr Navarro, one of Mr Trump's favorites, was initially excluded from the trip to Argentina, leading some to conclude that the hardliners had lost ground. Mr. Trump also sided with Mr. Navarro after Mr. Kudlow shot him on television. But the US Trade Representative, Robert Lighthizer, has since allowed Navarro's trip, suggesting he may be available to encourage Trump to play hard.

For Mr. Lighthizer, a senior commercial lawyer who sued China for flooding the US market with cheap steel, the negotiations represent an opportunity to revive a difficult business.

But he also sees the meeting between Mr Trump and Mr Xi as a potential danger, especially if Mr Trump opts for a quick agreement that would delay or update the new rates in the hope of encouraging nervous markets, depending on the population . familiar with your thought

Lighthizer also faces a challenge from Mnuchin, who has made it clear that he sees himself as the country's chief negotiator, officials said. According to those who know him, Navarro sees Mnuchin as one of the "globalist" circles who urge Trump to give up his promise to end China.

Another US official said that the main internal debate was now on the scope of a compromise that Mr. Trump could propose to Mr. Xi: postpone the rate increase to 25%, plus new rates of $ 267 billion. , or only the new ones.

This underscores the extent to which Mr. Trump's position has changed since he announced global tariffs on China, he said that the Chinese were not yet ready to negotiate an agreement and said that the trade wars were "easy to win". Only Two Weeks A long time ago, trade-related disagreements between China and the United States thwarted attempts to produce a joint declaration after an Asian economic meeting.

Trump is well aware of the threat posed by an economic downturn to the founding of his presidency. This made him receptive to the advice of moderates such as Mr. Mnuchin and Mr. Kudlow, as well as strange people such as Wall Street financier Stephen A. Schwarzman, who warned him that he would be blamed for job losses, market losses and other economic factors. Damage to a prolonged trade war with China.

On Tuesday, Kudlow hijacked questions about the depressing effect of trade tensions on the markets. He argued that tariffs were only a fraction of the US economy, which continues to show solid growth in employment and income. And he said that the negative effect had been much greater in China.

"I'm not saying there are no winners or losers in this game," said Kudlow. "But, on the other hand, I think we are much better prepared than the Chinese to deal with it."

In China, where growth has slowed and the stock market has weakened, the government is considering a significant reduction in import tariffs that would reduce trade barriers for businesses around the world, including those in the United States. said People on the reflection of Beijing.

But the American demands could be an important point. Chinese leaders are reluctant to accept permanent US tariffs on Chinese products, fearing that this commitment will be perceived by them as a sign of weakness.

Robert Lighthizer, left, the US Trade Representative, with Peter Navarro, director of the White House Trade Office, in Washington in March.

So far, the two parties have discussed mainly beyond each other. Chinese officials have expressed dismay at visiting Americans over why the administration failed to respond to the 142-point list of proposals they sent to the United States. Mr. Kudlow said that once his colleagues translated the document into English, they discovered that there was little news there.

"We can not find many changes in their approach," he said. "What is the calendar, what is the mechanism of execution?"

Despite all the turbulence, Mr. Lighthizer is determined to bring out the best of the situation, according to people who have spoken to him in recent days. This is partly because Trump is always happy to have been able to get a new North American Free Trade Agreement before the summit meeting.

But even that agreement hit a pothole. Prime Minister Justin Trudeau of Canada is arguing with Trump over Canada's request that the United States eliminate tariffs on steel and aluminum under the new treaty.

Mr. Trudeau has not yet confirmed to the US authorities that he will attend the signing ceremony of the Buenos Aires agreement with Trump and Enrique Peña Nieto, outgoing President of Mexico. Mr. Trudeau could eventually delegate this task to a subordinate, according to two people familiar with the situation, which could aggravate tensions with Mr. Trump.

Trump will also calm another injured ally, Britain, after telling reporters on Monday that the exit agreement that Prime Minister Theresa May had negotiated with the EU could prevent Britain from negotiating with the states. -United. Kudlow said Trump was referring to a clause in the deal saying he could ban Britain from negotiating a free trade agreement with the United States.

British officials said nothing in the agreement would prevent Britain from negotiating a bilateral trade deal with the United States or anyone else. They expressed surprise at the fact that Trump, a declared Brexit lawyer, would try to sabotage the most realistic way to negotiate the exit of Britain.

Mr. Trump's explosion in Brexit highlighted his unpredictability, the same quality that he will take during his meeting with Mr. Xi. The Chinese and US authorities recognize the importance it attaches to good deals, obtained after direct negotiations between leaders.

Outside of dinner, Kudlow said no further meetings between Chinese and US officials were planned. But Trump's aides tried, in different ways, to set the stage for the meeting with Xi.

Mnuchin, who has been generally reluctant to directly challenge Trump, views the talks with China as critical and sees the consequences of the trade war as a threat to his legacy, according to a person familiar with his thinking.

On occasion, several officials said that the Chinese had tried to avoid Lighthizer for the benefit of Mr. Mnuchin, who regularly communicated with Xi's director of operations, Liu He. While Mr. Mnuchin shares Lighthizer's view that tariffs bring China to the negotiating table, he told Mr. Trump that the time has come to reduce exposure the "volatility" of the negotiations. markets react to tensions, according to several.