U.S. President Donald Trump, smiles while being introduced during the National Prayer Breakfast in Washington, D.C., U.S. (Photographer: Win McNamee/ Pool via Bloomberg)

Trump Upbeat About Trade Deal After Receiving China Response

(Bloomberg) -- President Donald Trump said he is optimistic about resolving the U.S. trade dispute with China after receiving a response to his demands from Beijing, ahead of a widely anticipated meeting with China’s Xi Jinping in Argentina this month.

Trump told reporters Friday that the Chinese response was largely complete but was missing four or five big issues, signaling that tough discussions still need to take place between the two sides as they head into the Nov. 30-Dec. 1 meetings at the Group of 20 summit in Buenos Aires.

Trump Upbeat About Trade Deal After Receiving China Response

“China wants to make a deal,” Trump said. “They sent a list of things they are willing to do, which is a large list and it is just not acceptable to me yet. But at some point I think that, we are doing extremely well with respect to China.”

U.S. stocks erased losses as investors clung to signs the White House will cool trade tensions with the world’s second-largest economy. Equity markets have reacted swiftly to any trade-related headlines in recent days as the threat of more tariffs on Chinese goods looms.

Trump said the U.S. would proceed with a threat to impose additional tariffs on $267 billion worth of Chinese products if the two countries don’t reach a deal, but he added, “We may not have to do that. China would like to make a deal.”

“Hopefully, we will make a deal, and if we don’t, we are doing very well just the way it is right now,” Trump added.

G-20 Ceasefire

The U.S. has so far imposed tariffs on $250 billion in Chinese imports with duties on the largest $200 billion tranche of those due to rise to 25 percent from 10 percent on Jan. 1. In retaliation, China has slapped tariffs on $110 billion in imports from the U.S. and effectively shut off its purchase of key American agricultural exports including soybeans.

Some analysts and officials have raised the possibility that the two presidents could agree to a ceasefire of sorts at the G-20. That could entail China dropping some of its retaliatory measures and the U.S. agreeing not to go ahead with the planned January increase in tariffs on more than 6,000 product categories.

Commerce Secretary Wilbur Ross told Bloomberg on Thursday that Trump and Xi at best would come up with a “framework” deal at the G-20. That would then be followed by months of talks, Ross said.

Missing Items

While broadly optimistic, the president’s comments on Friday pointed to the missing items in the Chinese offer, signaling that a large gap still remains between the two sides.

Hawks in the administration and some in the U.S. business community also remain concerned that Xi may draw the U.S. president into a protracted negotiation.

Senior administration officials have argued that such negotiations by previous American presidents have resulted in Washington being outplayed by the Chinese, who have used the U.S. political calendar as an advantage. As a result, administration officials have said they would insist on demonstrable and tangible actions by Beijing before engaging in any talks.

One person briefed on the list presented by Beijing this week said it wasn’t clear that the Chinese were willing to make those sorts of concessions, especially after Republican losses in the House in this month’s midterm elections.

Beijing’s Offer

The Chinese list was structured as a written response to U.S. demands presented in May, the person said. But Beijing’s offer didn’t address White House concerns over the way Chinese authorities force foreign companies to transfer technology. Also missing were any concessions related to what the U.S. has long claimed are state-directed Chinese cyber-attacks on American companies to steal intellectual property, the person said.

William Reinsch, a trade expert at the Center for Strategic and International Studies in Washington, said not enough time is left before the G-20 to hammer out a comprehensive deal given the continuing discussions and the complexity of the unresolved issues. As a result, he said, the best possible scenario for the Buenos Aires meetings was that Trump and Xi hand over the task of detailed negotiations to senior aides and that Trump put a time limit on any talks.

“It’s hard for me to imagine that they can in one or two meetings and in a day solve all of the things that they have put on the table,” Reinsch said. “The most likely scenario is that they commit to serious negotiations,” he said, adding: “And then that sort of kicks the can and we see what happens.”

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