(FT) – President Donald Trump said he would consider doing an “interim deal” with China after suggestions that his team were pitching the idea to reduce tensionsy with Beijing.
Senior Trump administration officials have debated removing or reducing some tariffs on Chinese imports in a bid to reduce trade tensions with Beijing, potentially paving the way for a new ceasefire between the world’s two largest economies.
“I see a lot of analysts are saying an interim deal, meaning we’ll do pieces of it, the easy ones first,” Mr Trump said on Thursday when asked by reporters. “But there’s no easy or hard. There’s a deal or not a deal . . . It’s something we would consider, I guess.”
People familiar with the internal debate said the discussions in Washington about de-escalation were far from finished, and Mr Trump could still decide to keep intensifying the trade war in the coming weeks.
But they stressed that US officials were seriously considering clawing back some or all of the levies that took effect on September 1, hitting $112bn of additional Chinese goods, and possibly holding off on higher tariffs planned for October and December.
The US president did make a rare “goodwill” gesture towards Beijing on Wednesday, saying that an increase in existing tariffs on $250bn worth of Chinese goods, from 25 per cent to 30 per cent, scheduled for October 1 would be pushed back for two weeks because the original date coincided with the 70th anniversary of the founding of the People’s Republic of China.
Bloomberg News reported on Thursday that Trump officials were considering delaying and rolling back more tariffs to reach an interim peace deal with China on trade. A White House official denied the report to CNBC television, saying it was “absolutely not” the case. The White House refused to discuss the issue when contacted for comment.
“This is a live issue but nothing is very firm,” said one person briefed on the negotiations, who pointed to concerns within the administration about the trade war’s political impact on Mr Trump’s 2020 re-election bid. “There’s a recognition that if you keep ramping this up you’re going to lose the election.”
People briefed on the matter said the idea being discussed within the administration was to return to the status quo earlier this year, when tariffs were in place on $250bn of Chinese goods but no more than that. In return, China would agree to resume purchases of US agricultural goods and possibly even make some new commitments on intellectual property protection.
“The notion that they want to get back to tariffs on $250bn is a real one,” said the person briefed on the talks. “You bank stuff along the way, and then you hold firm on the $250bn and wait until they make the reforms they need to,” the person said, adding that the big question was whether Mr Trump was “patient enough” to allow that strategy to unfold.
Mr Trump’s goodwill gesture of delaying the October tariff increases followed Beijing’s decision earlier on Wednesday to exempt 16 types of US products from Chinese tariffs ahead of the latest round of talks, which are scheduled to take place later this month and to be followed by a trip to Washington by top Chinese negotiators in October.
China’s commerce ministry welcomed the gesture and added that Chinese companies had already started making inquiries about prices for US agricultural goods, according to the country’s state broadcaster.
“We hope that China and the US can continue to meet each other half way and take practical steps to create a good environment for talks,” said Gao Feng, spokesman for the ministry.
On Thursday morning Mr Trump said on Twitter that it was “expected that China will be buying large amounts of our agricultural products”, projecting optimism about the talks. However, despite the president’s frequent promises that large farm purchases from China were around the corner throughout the trade war, they have not materialised.
China’s offshore renminbi strengthened 0.4 per cent versus the dollar to its strongest in almost three weeks in response to the tweet, and the S&P 500 closed 0.3 per cent higher.
Mr Trump and Chinese president Xi Jinping appeared to reach a truce in June when they met at the G20 summit in Osaka. But the ceasefire proved very shortlived as the US president then accused his Chinese counterpart of not following through on what he claimed was a promise to buy American agricultural produce.
After Robert Lighthizer, US trade representative, and Steven Mnuchin, US Treasury secretary, returned from unsuccessful negotiations in Shanghai in July, Mr Trump lashed out at China and announced a new round of tariffs, dramatically escalating the trade war, which is starting to take a toll on US consumers and is hurting farmers.
Mr Trump tweeted last week that he was “doing very well” in the negotiations with China and warned Beijing not to wait for a Democratic president, saying that he would win the election in 2020 and force Beijing to sign a “much tougher” deal after the poll.
Many analysts dismiss his tweets since his claims about successful dealmaking are frequently not followed by results. While Mr Trump has frequently said he was willing to hold out for a good deal — and was in no rush — farmers in agricultural states that were crucial to his election in 2016 are increasingly feeling the pain from the trade war.