Trade Debate: US Mulls Lifting Sanctions on China to Hasten Deal, Calm Markets
A new tactic being debated within the Trump administration aims at giving Beijing incentives to make long-term concessions. It also pits Mnuchin against Lighthizer.
Please consider U.S. Weighs Lifting China Tariffs to Hasten Trade Deal, Calm Markets.
U.S. officials are debating ratcheting back tariffs on Chinese imports as a way to calm markets and give Beijing an incentive to make deeper concessions in a trade battle that has rattled global economies.
The idea of lifting some or all tariffs was proposed by Treasury Secretary Steven Mnuchin in a series of strategy meetings, according to people close to internal deliberations.
But Mr. Mnuchin faces resistance from U.S. Trade Representative Robert Lighthizer, who is concerned that any concession could be seen as a sign of weakness, these people said.
In past China discussions, Mr. Trump has sided with Mr. Lighthizer on tariffs, rather than Mr. Mnuchin. But this time, the president has made clear he wants a deal—and is pressing Mr. Lighthizer to deliver one, according to people familiar with the discussions.
In recent days, Mr. Trump has made bullish remarks on the prospects of striking an agreement. “I think we’re going to be able to do a deal with China,” he told reporters Monday.
Trump Wants a Deal
The preceding two paragraphs tell you nearly everything you need to know at the moment. Trump wants a deal, so expect a deal. US farmers have gotten clobbered and the stock market has Trump worried.
There is one more angle and the WSJ failed to mention it. Trump does not want to fight multiple trade wars at the same time. His concern has shifted away from China back towards the EU.
Farmers are again at the forefront.
Trump Administration Reneges On Commitment To Leave Ag Out of Trade Talks With E.U.
On July 25 of last year, President Trump and European Union President Jean-Claude Juncker agreed to start negotiations toward a U.S.-E.U. trade agreement that would reduce or eliminate tariffs on non-automotive industrial goods. In a joint statement, they agreed that agriculture would not be discussed, except that the E.U. would increase the volume of American-grown soybeans it buys.
Either Trump and his trade officials have forgotten the no-ag agreement or they’re worried that American farmers’ patience with Trump’s trade war, and thus Trump himself, is running out. Or, they’re worried that Congress won’t ratify an agreement that excludes agriculture. Whatever the reason, Trump has reneged on that commitment; the administration is now seeking “secure comprehensive market access for U.S. agricultural goods in the EU by reducing or eliminating tariffs.”
“We have made very clear that agriculture would not be included,” EU trade commissioner Cecelia Malmström said after meeting with U.S. Trade Representative Robert Lighthizer on Jan. 9.
Employing his usual strong-arm negotiating style, Trump has held out the threat of a 25% tariff on car imports against trading partners that don’t bend to his will. This has caused no little consternation in Germany, which exports a lot of Mercedes, BMWs and Volkswagens to the United States. Trump reportedly told Juncker in December that he wouldn’t impose the car tariffs on the E.U. But he also agreed that agriculture would be off the table, and now here we are, trying to put it back on.
Lies All Around
In July, Trump sang the praises of his meeting with Jean-Claude Juncker. “This was a very big day for free and fair trade. A very big day indeed.”
On July 25, I commented Trump and Juncker Supposedly Agree to Trade Deal: Lies All Around
I Can Be Stupid As Well
As part of the agreement to agree which has now been rescinded, came a hilarious report that Juncker told Trump: “If you want to be stupid, I can be stupid, as well.”
Reversal of Lies
It was not a "very big day indeed". Rather, it was a pack of lies that temporarily eased pain on the EU in favor of more pain on China.
In July, Trump was more concerned about China, today he is more concerned about farmers.
Tomorrow? Who knows?
Not me, but I do know lies when I see them. That lie in July was remarkably easy to spot.
One Final Angle
There is one final angle here.
Auto tariffs on the EU could not possibly come at a worse time for the EU. German industrial production has collapsed and cars are at the forefront of it . See Europe Likely in Recession Now: Germany, France, Italy Production Collapsed.
Brexit will put immense pressure of German exports and simultaneous US tariffs will literally wreck Germany.
Given that Trump is in favor of Brexit, this reversal of lies could be with that in mind, or it could be happenstance. Either way, tariffs would wreck Germany.
Mike "Mish" Shedlock