China Is Going To Try One More Time To Pacify Donald Trump On Trade Before Things Get Ugly, Ok?

One certainly imagines this is going to be too little, too late given Trump’s recent penchant for escalating any and all conflicts whether related to trade or domestic politics, but for whatever it’s worth, Beijing is all set to quantify their previously nebulous commitment to helping reduce the bilateral U.S. deficit.

You might recall that part of the “truce” struck in Washington a couple of weeks back involved China agreeing to purchase more American goods. Specifically, this was the joint statement released on May 19:

That was supposed to put a stop to the tit-for-tat escalations and less than 24 hours later, Mnuchin confirmed as much on national television, telling Fox that for now, the “trade war is on hold.”

Officially, the detente lasted a little over a week and ended when Trump did what appeared to be an about-face, saying China will indeed be hit with tariffs on $50 billion worth of goods starting “shortly after” June 15, despite the tentative deal Mnuchin struck with Chinese Vice Premier Liu.

That move not only contradicted Mnuchin’s public comments about the trade war being “on hold” (a characterization that was also undermined explicitly by Peter Navarro in an NPR interview last week), but also effectively rendered Wilbur Ross’s planned trip to Beijing pointless. Here’s a quick summary of that trip from Politico:

High-level trade talks with China over the weekend produced no immediate breakthroughs, the White House indicated Monday in a bland statement that made no reference to Beijing’s threat to halt the negotiations if the United States proceeds to impose tariffs on $50 billion worth of Chinese goods.

“The meetings focused on reducing the United States’ trade deficit by facilitating the supply of agricultural and energy products to meet China’s growing consumption needs, which will help support growth and employment in the United States,” the White House said.

“The United States officials conveyed President Donald J. Trump’s clear goal for achieving a fair trading relationship with China,” the statement said.

[…]

Beijing was first out of the gate with a statement on Sunday after two days of meetings in Beijing led by Commerce Secretary Wilbur Ross and Chinese Vice Premier Liu He.

China warned that “all economic and trade outcomes of the talks will not take effect if the U.S. side imposes any trade sanctions, including raising tariffs.”

That was a reference to Trump’s plan to impose a 25 percent tariff on about $50 billion worth of Chinese goods related to a Chinese initiative that aims to make the country dominant in several high-tech sectors like robotics, artificial intelligence and self-driving cars.

The Trump administration plans to issue the final list of goods that will be hit with the tariffs by June 15, and impose the duties shortly thereafter. That’s expected to prompt China to retaliate on $50 billion worth of U.S. goods, including leading exports like soybeans and aircraft.

So that’s where things stood headed into this week and the standoff comes as the U.S. is now sharply at odds with the E.U., Canada and Mexico following the decision not to extend waivers on the steel and aluminum tariffs (that prompted retaliations and threats from all sides).

Well now, according to multiple sources, China has come up with some numbers and here they are, via Bloomberg:

China has offered to boost purchases of American goods by about $25 billion this year to fulfill President Donald Trump’s desire to shrink the U.S. trade deficit with the world’s second-largest economy, according to two people familiar with the matter.

President Xi Jinping’s government has started to quantify its commitment to import more U.S. products as trade talks between the two nations progress, said the people, who spoke on condition of anonymity because the negotiations aren’t public.

In particular, China has shown willingness to step up purchases of U.S. goods including crude oil, coal and farm products, according to the people briefed on the talks.

Chinese officials have indicated the nation is open to buying as much as $70 billion in U.S. exports, the people said. But much of that represents products the Asian nation has already promised to buy, and in some cases the Chinese haven’t been willing to back their pledges with written contracts, they said.

That’s a followup to initial reporting by WSJ. To wit:

China offered to purchase nearly $70 billion of U.S. farm, manufacturing and energy products if the Trump administration abandons threatened tariffs, according to people briefed on the latest negotiations with American trade officials.

Not to put too fine a point on it, but that ain’t gonna cut it. Or at least not in Trump’s mind.

He’s not a “meet in the middle” type of guy and I’m not at all sure the above constitutes the kind of clean relent he’s looking for when it comes to claiming “victory” in this increasingly quixotic crusade.

At a certain point, he’s going to push his luck too far. It seems like Xi wants to figure out a way to pacify this moron, but there’s only so much the Chinese are going to be willing to do – or at least willing to do publicly.

Remember, Trump isn’t the only one with domestic political concerns. Xi wants to present China as a more open economy and he’s anxious to step into any void that Trump leaves by pushing the U.S. towards more isolationism, but it’s probably safe to assume that there will come a tipping point when Beijing simply tells Washington to go fuck itself.