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Trump, China trade war: Xi Jinping meeting at G20 could determine course

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xi jinping trump tariff meeting 2x1
The
future of the US-China trade war will be decided during a meeting
between Presidents Xi Jinping and Donald
Trump.

iStock; Lintao Zhang/Getty
Images; Win McNamee/Getty Images; Samantha Lee/Business
Insider


  • President Donald Trump is
    meeting with Chinese President Xi Jinping on Friday and
    Saturday at the G20 summit in Argentina.
  • At the top of their agenda: the
    US-China trade war.
  • The US and China have
    implemented tariffs on $360 billion worth of goods flowing
    between the two countries.
  • Prospects for meaningful
    progress are dim as the two sides remain far apart on major
    issues.
  • Trump’s mood could also
    determine the outcome.

The moment of truth for President
Donald Trump’s trade war with China is fast approaching.

Trump is set to meet with Chinese
President Xi Jinping at the G20 summit in Buenos Aires, Argentina
on Friday and Saturday.

The meeting with Xi could
determine whether the US and China can ultimately resolve their
difference and lower tariffs currently affecting more than half
of all trade between the two countries. Or, the outcome could be
that the two sides will remain locked in a still-burgeoning trade
war with no end in sight.

And you may ask yourself, how did we get here?

The trade fight between the US
and China has been brewing for decades, as Beijing’s economic and
political ascendance has threatened the US’s dominance on the
world stage. Trump, a long-time proponent of tariffs, seized on
China’s growing might during the 2016 campaign.

After a year of courting China as
an ally in negotiations with North Korea, Trump turned on Beijing
in March with the announcement of tariffs on Chinese goods. The
administration argued that the tariffs were a necessary measure
to punish China for alleged theft of US intellectual property and
would force the ruling Communist Party to reform their economic
policies.

After a few months of unsuccessful negotiating, Trump imposed the
first round of tariffs against China in July. The resulting
back-and-forth has led to the current state of affairs: US
tariffs on $250 billion worth of Chinese goods and Chinese
tariffs on $110 billion worth of American goods.


Donald Trump Xi Jinping
Andy
Wong/AP Photo


Economists have warned that escalation of the trade war or
allowing the tariffs to remain in place for an extended period of
time would be
seriously damaging for the US economy
. US companies have

warned that the tariffs are harming
their businesses, and

Americans farmers are getting whacked
by China’s retaliatory
measures.


Read more:

A new study found that Trump’s trade war could take a gigantic
bite out of the US economy»

If Xi and Trump are unable to reach a deal the two countries
would enter what some experts have called an “economic
Cold War
.”

The
US would also likely move forward
with tariffs on the
remaining $255 billion worth of Chinese goods not currently
subject to tariffs. That round of tariffs would squeeze many
popular consumer products and
retailers like Walmart
have warned the move would likely
result in higher prices for customers.

A dim dealmaking outlook…

While economic concerns and the
summit have brought the two leaders together in Buenos Aires,
most experts agree that the Trump-Xi meeting will produce little,
if any, results.

Stewart Patrick, a senior fellow
at the Council on Foreign Relations,
said the G20 meeting
offers the prospect of a Band-Aid
fix at best.”

“Given current mistrust, even a
truce seems unlikely,” Patrick added.

At most, experts say, the two
sides could agree to delay the implementation of even more
tariffs.

Ed Mills, a
policy analyst at Raymond James, said there could be some upside
in the form of a rough outline of a deal.

“Officials on both sides have
been rhetorically setting the stage over the past week without
any indication that either side is willing to back down from the
dispute,” Mills said. “The two nations remain far apart on a
negotiated solution, increasing the chances of deterioration and
continuing tariff escalation in 2019.”


Donald Trump China
U.S.
President Donald Trump and China’s President Xi Jinping (not
shown) make a joint statement at the Great Hall of the People on
November 9, 2017 in Beijing, China. Trump is on a 10-day trip to
Asia.

Thomas Peter-Pool/Getty
Images


But the sheer size of issues to
discuss likely means that any agreement that could come out of
the meeting will be preliminary and not take the larger threat —
the so-called economic Cold War — off the table.

We caution that
fundamental issues relating to intellectual property and
subsidization appear intractable at this stage, which suggests
that the broader threat of Chinese trade tensions will persist,”
said Isaac Boltansky, a policy analyst at research and trade firm
Compass Point.

Trump acknowledged in an
interview with the Wall Street Journal this week that a deal to
prevent the tariff rate from increasing in January is “highly
unlikely.” The president also appeared to express misgivings
about a possible deal while talking to reporters on
Thursday.

“I think we’re very close to doing something with China but
I don’t know that I want to do it, because what we have right now
is billions and billions of dollars coming into the United States
in the form of tariffs or taxes,” Trump said.

Most of Trump’s advisers also
seem to be urging caution ahead of the meeting.

But the increasing pain from the
tariffs could compel Trump to agree to some sort of preliminary
deal, said Matthew Goodman, senior adviser for Asian
economics at the Center for Strategic and International
Studies.

My personal guess — and
I’m sticking my neck out here — is that there will be some kind
of ceasefire agreed to largely because I think President Trump
and President Xi both have an incentive to put this dispute on
hold,” he said in a
recent press call
.

Goodman argued that the recent US stock market woes and China’s
slowing economy have put enough pressure on the two sides to make
some progress.

… but Trump is a wild card.

But knowing exactly what will
happen when the presidents are face-to-face is impossible because
of Trump’s infamous unpredictability.

For one thing, Trump’s
international trips — the G7 summit, the recent trip to Paris,
and more — have been anything but predictable.

These trips were marred by fights
with other world leaders, Twitter tirades, and refusals to sign
on to ceremonial communiques with other nations. 

“This binary catalyst will be
hugely influenced by Trump’s mood after a long flight to a
foreign country at a multilateral summit that will be filled with
world leaders whose voters tend to have an extremely negative
view of Trump,” Chris Krueger, a strategist at Cowen Washington
Research Group, said.

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