It could be a make-or-break week for the delicate trade negotiations between the United States and China as they drift further beyond the ambitious 90-day clock set last year by the leaders of the world’s two largest economic superpowers.
The Trump administration will welcome China’s top trade negotiator in Washington on Wednesday in hopes of striking a comprehensive deal that would address long-standing concerns by the US government and top business executives.
But the meeting comes as President Donald Trump is consumed with an escalating political crisis over his threat to close the US-Mexico border – an echo of meetings earlier this year that were overshadowed by the partial government shutdown.
As the tit-for-tat tariff war between the United States and China stretches beyond the one-year mark, top officials from both countries in recent weeks have begun to signal they are nearing the end of a trade standoff that once rattled Wall Street, though neither side has provided details about how talks progressed at last week’s round of negotiations in Beijing.
“We’re getting to the point where it’s clear that both governments want a deal. The presidents want a deal, and they need to get through the end-game issues. This is a critical week,” Myron Brilliant, executive vice president and head of international affairs at the US Chamber of Commerce told reporters on Tuesday.
Some of the most difficult hurdles lie ahead as Chinese Vice Premiere Liu He arrives to continue talks with his counterparts Robert Lighthizer, the country’s top trade envoy and Treasury Secretary Steven Mnuchin.
White House economic adviser Larry Kudlow on Wednesday opened the possibility that Chinese negotiators could extend their trip longer than initially planned.
“They will be here for three days, maybe more,” Kudlow told reporters at a breakfast in Washington hosted by the Christian Science Monitor.
He declined to comment on specific details of a deal, but said the administration hopes this week to get closer to a pact.
At issue is whether the two sides can reach an agreement that could potentially lift billions of dollars of tariffs on Chinese goods in exchange for the United States having the power to take unilateral action to penalize Beijing if it fails to play by the rules of the deal.
“This end game issue – this is what we’re working through,” said Brilliant. “This is why we don’t have a final package at this point.”
Trump and other top administration officials in recent weeks have sent strong signals they plan on keeping in place tariffs on $250 billion of Chinese goods for a “substantial period of time.”
“We have to make sure that if we do the deal with China that China lives by the deal,” Trump told reporters as he left Washington for Ohio ahead of Lighthizer and Mnuchin’s trip to Beijing last week.
At the time, Trump didn’t spell out whether the US is planning to keep in place tariffs on all of the $250 billion of Chinese goods the US has imposed penalties or for how long.
The White House could take a variety of approaches either by deciding to partially rollback tariffs or potentially reducing the level of tariffs currently imposed, a decision that will ultimately fall to the President who has favored a hefty tariff policy.
Kudlow declined repeatedly to speculate on whether the administration would potentially ease tariffs on Beijing.
“I can’t be specific,” he said. “We’re making headway, but hopefully we’re going to make headway this week.”
Top officials have made clear they see the penalties as leverage over Beijing, but might be willing to ease some of them depending on the size of the deal.
Kudlow has previously also hinted the United States would be willing to extend trade negotiations with China weeks or even months to strike the right deal.
“This is not time-dependent. This is policy- and enforcement-dependent,” said Kudlow in a speech in Washington last week. “If it takes a few more weeks, or if it takes months, so be it. We have to get a great deal, as the president says, that works for the United States. That’s our principle interest.”
Talks between the two sides have continued this month after the Trump administration officially shelved a plan to sharply increase tariffs on $200 billion of Chinese exports as the world’s two largest economies inch closer to a deal. The administration hasn’t offered a time frame on how long the US government would be willing to delay the tariff increase on China.
“You have a moment in time right now – the focus of the two governments, the whole world is watching, the stakes are very high,” said Brilliant. “Neither state wants to back away from these negotiations, so the momentum is still moving us forward to get to a final deal.”