US, China close to striking a monumental trade deal

Saul Bowman
April 7, 2019

US President Donald Trump said on Thursday that the United States and China are "rounding the turn" in a lengthy negotiation over trade and predicted that "something monumental" and great for both countries could be announced in a matter of weeks.

Trump has been accusing China of indulging in unfair trade practices, like the theft of U.S. technology and massive state intervention in markets, contributing to the huge trade deficit amounting to $375 billion.

Failure to achieve a deal would probably see the U.S. more than double the 10% tariffs on $200bn (£153bn) of Chinese goods and impose fresh tariffs.

Over the past year, Washington and Beijing have imposed hundreds of billions of dollars worth of tariffs on each other's imports.

Michael Pillsbury, an occasional Trump adviser on China attached to the Hudson Institute said the emerging accord may not sweep away all the irritants in U.S.

Summit details aside, the meeting, which is reportedly scheduled for 4:30 pm, has been hailed as a sign of movement towards the conclusion of a deal.

The president also confirmed that the main sticking points remain measures to curb what the USA says is theft of intellectual property and whether existing tariffs would be removed.

USA and China agree to some of the "toughest things" in trade talks.

While White House officials have expressed cautious optimism in recent days about securing a deal in the near future, a US decision to tentatively sell fighter jets to Taiwan may affect the outcome of this week's talks as well as any Trump-Xi summit, one of the people said.

If this week's round of negotiations are successful, a final agreement will be sealed in a summit between US President Donald J. Trump and Chinese President Xi Jinping, otherwise, the negotiations could drag on until the G20 Summit in June.

A spokesman for China's Ministry of Commerce declined to answer questions on the target date at a press conference in Beijing Thursday or provide an update on the talks. Trump didn't announce a summit with Xi - a meeting Trump has said is critical to finalising an agreement.

Trump also said that a trade deal with China is good for both countries and the world as well.

"We're going to make a very good deal or we're not going to make a deal at all", he said.

However, China's state media Xinhua quoted Chinese Vice Premier Liu He and said a " new consensus has been reached between China and the U.S." on the trade agreement's text under negotiation between the two sides.

It will be interesting to see if the recent spurt of good economic news inspires Chinese negotiators to dig in their heels or makes them more keenly aware than ever that their ambitious agenda for the coming decades will be ruined if the trade war continues.

Japanese shares and USA equity futures edged up alongside Treasury yields following the remarks out of both China and the U.S. Asian trading volumes were muted, with China and Hong Kong shut for a holiday.

Trump must not settle for a short-term political deal that doesn't include real, enforceable ways to hold China accountable for its promises, he demanded. He said he would discuss tariffs with Liu in their meeting but didn't elaborate.

"It's a very big deal", Trump told reporters.

China and the US are working to end a standoff that has shaken financial markets and darkened the outlook for the world economy.

"Sterling has been the weakest currency overnight, giving back the gains we saw this time yesterday", said NAB's head of foreign exchange strategy Ray Attrill. China and the US shouldn't bind their hands by imposing new tariffs on each other.

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