Fate of trade war unclear ahead of Trump-Xi G20 meeting
The withering trade war President Donald Trump has waged with China could ease Saturday. Or it could worsen. Or it could remain the same anxiety-inducing, growth-slowing slog it’s been for months.
The closely watched meeting Trump will convene with his Chinese counterpart Xi Jinping on Saturday morning in Japan has a host of potential outcomes, but none are certain. Instead, the two sides hope to gain a better understanding of each leaders’ position as they work to resolve a dispute that carries immense political risk for both men.
Trump said before the meeting that he had made progress with Xi during pull-aside discussions in Japan ahead of their formal sit-down.
“I was with him last night. A lot was accomplished, actually, last night,” Trump said during a breakfast meeting in Osaka. World leaders had met for dinner on Friday evening at Osaka Castle, which is where Trump most likely spoke with Xi.
“The relationship is very good with China. As to whether or not we can make a deal, time will tell,” Trump said.
The talks, which have been anticipated for weeks, come after trade negotiations broke down in May. The US said China backed out of previously made commitments to enact certain reforms in exchange for tariff relief.
Trump has deemed himself the only person able to bring the dispute to a resolution through face-to-face talks with Xi. There has been little communication until recently as negotiators from both sides resumed discussions ahead of the leaders’ meeting.
US and Chinese trade teams met Friday in Osaka, according to a person familiar with the meeting. Participants included US Trade Rep. Robert Lighthizer, US Treasury Sec. Steven Mnuchin and Chinese Vice Premier Liu He.
The US-China trade dispute has clouded the G20 summit here, where leaders are expressing concern over a global economic slowdown and the myriad trade feuds Trump has escalated around the globe.
Speaking a day before meeting Xi, Trump previewed a useful meeting with his Chinese counterpart but gave little away in terms of possible outcomes.
“At a minimum it will be productive. We’ll see what happens and what comes out of it,” Trump said. “It will be a very exciting day, I’m sure.”
Meanwhile, Trump’s advisers say the talks are occurring without preconditions and that all options — including either a trade truce or the application of new tariffs — are potential outcomes. Trump has said he’s willing to slap tariffs on $300 billion in Chinese goods on top of the duties he’s already applied, but aides have suggested a decision to delay the new round of tariffs is a potential result of Saturday’s talks.
No commitments ahead of talks
Trump on Friday denied that he’d made any commitments to hold off on new tariffs as a condition for meeting Xi, a sentiment echoed by his economic adviser Larry Kudlow on Fox News earlier in the day.
“No there are no preconditions,” Kudlow said.
This week, Mnuchin said the two sides were 90% of the way to an agreement when the talks broke down in May, but the remaining 10% has proved difficult for negotiators to break through.
US officials said this week there has been little indication over the past weeks that China is willing to cede to American demands they reform their economy. These people, who are close to the discussions, said Trump and Xi would need to essentially re-establish the progress they made before talks broke down in Washington in May.
Instead, the officials say a likelier outcome of Saturday’s meeting is a truce of sorts that will avoid new tariffs while establishing a timeline for renewed talks. That’s similar to the result of Trump’s last sit-down with Xi, held in December in Buenos Aires. Back then, Trump agreed to delay tariffs as the two sides worked to strike a deal.
Complicating matters are the Trump administration’s scaled-up efforts to restrict Huawei, the Chinese telecom giant, from building 5G networks around the world, which Washington fears could be used by the Chinese government for spying.
Speaking at a session devoted to global data governance on Friday, the two men made veiled references to the ongoing dispute.
“We must also ensure the resilience and security of our 5G networks. This is essential to our shared safety and prosperity,” Trump said in his opening remarks at the summit of world leaders. Speaking ahead of Trump, Xi said, “We cannot develop ourselves behind closed doors nor shall we cause disruptions to the market.”
It’s expected Huawei will arise during the two leaders’ meeting.
A trio of high-profile meetings
The talks with Xi are one of three high-profile meetings Trump will convene in Japan on Saturday.
He discussed tensions with Iran over breakfast with the powerful Saudi Crown Prince Mohammed bin Salman, who has been accused of masterminding the murder of dissident journalist Jamal Khashoggi. Human rights activities have called on the White House to enact new sanctions on Prince Mohammed, but Trump has signaled he’s moved on from the incident.
On Friday, Trump was seen in easy conversation with the Saudi royal as leaders at the G20 lined up for a family photo. At one point, Trump rested his hand on Prince Mohammed’s back.
At the start of their breakfast, Trump lavished praise on the prince.
“It’s like a revolution in a very positive way,” Trump said, seated across from Mohammed at a hotel in Osaka. Trump hailed the prince’s steps toward “opening up Saudi Arabia,” including for women.
“You’ve done really a spectacular job,” Trump said.
Asked directly and audibly whether he would raise the issue of Khashoggi, Trump declined to respond.
“Thank you very much,” he said.
Instead, Trump hailed Saudi Arabia’s purchase of American military equipment.
Later, Trump will meet Turkish President Recep Tayyip Erdoğan amid a dispute between the two countries over Turkey’s purchase of the Russian S-400 missile system.
US officials have warned Turkey that it would not be allowed to buy the F-35 stealth jet if it goes ahead with the missile system purchase because the US believes the Russian system is incompatible with the F-35 jet — and has argued that Moscow could use it to gather intelligence on the aircraft.
Congress has threatened to impose sanctions in response, but Erdoğan said recently he doesn’t believe Trump will move forward with the sanctions because of their warm relationship.