Following his “very long”, “very good” phone conversation with Xi Jinping on Thursday, Donald Trump told his team to begin drafting a trade agreement with China.
That’s according to four people who spoke to Bloomberg.
Trump’s Thursday tweet added rocket fuel to risk-on sentiment that was already gathering a head of steam after U.S. stocks managed to close an otherwise abysmal month with the best two-day rally since February.
More than a few commentators suggested the President is just posturing ahead of the midterms and still others believe Trump’s newfound willingness to negotiate is primarily due to the October slide in U.S. stocks.
Whatever the case, it’s hard to imagine any “deal” Trump’s cabinet manages to craft ahead of the G-20 will be comprehensive. It sounds more like the White House just wants to sketch out some broad terms for a ceasefire.
“It was unclear if Trump was easing up on U.S. demands that China has resisted”, Bloomberg wrote this morning.
This sounds a lot like what happened in the lead up to Trump’s July meeting with European Commission President Jean-Claude Juncker. Just prior to that meeting, Trump tweeted that the U.S. would show “no weakness” on trade, only to hold an ad hoc press conference in the Rose Garden after meeting with Juncker for less than an hour.
That “deal” wasn’t really a “deal”. Rather, it was just an agreement not to escalate things further and it could be that Trump will try something similar here. Or who knows, maybe Thursday’s chat with Xi was a FaceTime call and the Chinese President used helpful flash cards like those Juncker employed to convince Trump to tone down the auto tariff rhetoric.
Whatever the case, it’s worth remembering that we’ve been down this road before. Back on May 19, after two days of talks in Washington, Steve Mnuchin and Vice Premier Liu He reached a tentative trade deal. That truce (which revolved around the prospect of China purchasing more goods from the U.S.) lasted all of about 10 days.
Facing a backlash from the protectionist contingent and fearing Mnuchin’s “on hold” comments sent the “wrong” message to his base, the President abruptly changed course, refusing to grant further waivers to Canada, Mexico, and the European Union on the metals tariffs, and setting a deadline (July 6) for the imposition of duties on $34 billion in Chinese goods.
It’s obviously been a train wreck since then.
So as Trump would say, “we’ll see what happens.”