It has been a few weeks since the last round of trade negotiations between the United States and China and while those involved have remained relatively tight lipped, a few details have leaked out. First off, both parties are scheduled to meet on two more occasions: beginning around April 29th, when U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin travel to Beijing and followed by a scheduled May 6th trip to Washington by Chinese Vice Premier Liu He. If all goes as planned, a final deal will be signed by President Trump and Xi Jinping by late May.
Earlier this month, President Trump stated, “We’ve agreed to far more than we have left to agree to,” which bodes well for the optimistic schedule. It has been reported that both sides have agreed, in principle, to increased imports of United States agriculture products, industrial products and services, and energy, which should eliminate the trade imbalance between both parties, and could form the basis of an initial agreement. With the 2020 election on the horizon, these terms would be a big selling point to certain constituencies President Trump needs to solidify a victory, and thus a positive sign for these negotiations.
However, there are a few areas of dispute between both parties. As previously discussed, the United States has expressed its concern regarding the state’s involvement in China’s economy as well as its anxiety over intellectual property. President Trump desires “strong enforcement language” in any deal, but that language has yet to be agreed to by both sides. Meanwhile, Chinese officials are pushing for the elimination of all tariffs on Chinese goods, which may be a tough sell, but possible, if they agree to certain concessions.
This is truly the calm before the storm. Both parties agree that, if a deal is not reached, the economies of United States and China face catastrophic damage, as a result of potential tariff increases and subsequent retaliation, which not only impacts Trump’s 2020 reelection hopes, but also China’s already slowing economy.
Still an agreement seems on the horizon, and we look forward to reporting as such in the near future. In the meantime, please feel free to reach out to our staff should you have any questions. As always, we look forward to exceeding your expectations.