WASHINGTON – President Donald Trump’s decision to back off his threat to raise tariffs on Chinese goods carries substantial political risk as the president faces increased pressure from Republicans, Democrats and some of his own advisers to win the kind of tough concessions that Beijing has long resisted.
Citing “substantial progress” in talks between the United States and China, Trump on Sunday evening halted plans to raise tariffs on $200 billion worth of Chinese goods at the end of this week. On Monday, the president predicted that President Xi Jinping of China would soon join him at Mar-a-Lago, Trump’s Florida resort, for a “signing summit.”
“We’re getting very, very close,” Trump said at a gathering of governors at the White House.
Trump’s optimism has cheered Wall Street and business lobbyists, who have been pushing for a quick end to the trade war. But Democrats and even some Republicans are not so sanguine.
Top Democrats, in an effort to outflank Trump on China, are warning loudly that the Chinese may simply be dangling false promises in hopes of getting the president to end a trade war that is hurting American farmers and damaging the Chinese economy. Some Republicans fear that Trump may settle for a deal that simply reduces the trade deficit between the two countries and potentially offers relief to a Chinese telecommunication giant, Huawei, which is facing criminal charges in the United States.
“It’s become a real concern that Democrats could use this against him in the 2020 election,” Michael Pillsbury, director of Chinese strategy at the Hudson Institute and a White House adviser, said of the dangers of Trump cutting a modest trade deal with China.
Trump has positioned his monthslong trade fight with China as necessary to win “the biggest deal” in history. China has agreed to make some changes to its trading relationship with the United States, including purchasing more soybeans and natural gas and preventing currency manipulation. The government has also committed to opening up financial services, insurance and car markets, changes the Chinese have previously discussed.
But many of the biggest sticking points still remain, including China’s state subsidization of companies, which gives Chinese firms a competitive advantage. Beijing also still appears to be falling short of the administration’s demands to stop what it says is a pattern of cybertheft and to end a requirement that U.S. companies hand over valuable intellectual property as a condition of doing business there, people familiar with the negotiations said.
The Chinese are touting a clause in their investment law that would crack down on such transfers of technologies and offering up tougher regulations surrounding patents and copyrights, but some administration officials are skeptical that these changes will go far enough.
The Chinese Embassy released a statement through China’s state news agency, Xinhua, on Monday saying talks over the weekend were focused “on the text of an agreement” and that the two sides would continue to push toward an agreement.
“The Chinese delegation said that substantial progress was made on such specific issues as technology transfer, protection of intellectual property rights, non-tariff barriers, service industry, agriculture and exchange rates,” the statement said.
Top Democrats have focused on Trump’s desire to reduce the bilateral trade deficit with China and are prepared to call any agreement that is based primarily on purchases of U.S. soybeans, liquid natural gas and other farm products a failure.
“At the heart of our economic challenges with China is its shirking of market economics, so it is troubling that Donald Trump may settle for a government commitment to buy U.S. agriculture as a means to let China off the hook,” said Sen. Ron Wyden, D-Ore.
Democrats will have their first formal opportunity to confront the Trump administration directly on its China trade policy Wednesday when Robert Lighthizer, the U.S. trade representative, testifies before the House Ways and Means Committee. Lighthizer, a longtime China hard-liner and the administration’s top negotiator, is expected to face tough questioning from Democrats seeking assurances Trump will not accept a watered-down deal and declare victory.
“With so many losses, Trump needs a win and any win will suffice – even one that is just Chinese promises of future purchases without meaningful, structural reform,” said Rep. Lloyd Doggett, D-Texas, who sits on the Ways and Means Committee.
Trump has already started to signal his political concerns publicly. During a news conference at the White House this month, the president suggested that he would invite Democratic leaders to participate in negotiations with China so that they would not be able to undercut whatever agreement he reaches.
“Any deal I make with China, Schumer is going to stand up and say, ‘Oh, it should’ve been better,'” Trump said, referring to Sen. Chuck Schumer of New York, the Senate minority leader. “That’s called politics.”