US-China trade talks at a halt, despite cheery Trump tweets

 edition.cnn.com  05/14/2019 20:33:14  3

Cautious hope for a deal remains, and after markets sank on Monday, Trump said a resolution could come within a month.

"We'll let you know in three or four weeks if it's successful," he said at the White House.

On Tuesday, Trump told reporters the trade war with China was a "little squabble" that could be resolved if China is willing to negotiate.

"We are, again, in a very, very strong position. They want to make a deal. It could absolutely happen," he said. "We have a very good dialogue. We have a dialogue going. It will always continue."

Yet there are few officials who believe that timeline is certain, at least before it's known where talks will head once negotiators get back to the table.

It's Trump vs. Xi in the China trade war -- and it's personal

Later Tuesday, Trump touted US economic growth at a newly opened liquid natural gas export facility in Louisiana. China had been on track to become the largest importer of US LNG, but among the retaliatory tariffs announced by Beijing on Monday was an increase to 25% on the US energy product -- leading to concerns of a slowdown in demand.

Trump didn't mention the trade disputes explicitly during his address, which diverged from the planned topics and into a riff hammering the field of Democrats vying to replace him.

Instead, he cast the issue of energy independence as one of national pride and said the US would no longer be disadvantaged by other countries.

"We don't need to be ripped off by the rest of the world because those days are over," he said.

A US trade delegation is expected to travel to Beijing in the coming weeks, but few details about the trip are known. Officials expect it to be at least another week at minimum before the delegation, led by Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, travel to China. Once there, it's not clear where the talks will pick up -- and whether the two sides must start again from scratch or whether there's a structure of a deal they can build upon.

For a deal to be reached, either the Chinese will need to agree to change certain laws related to their economic practices, or the US will need to back off its demands for those reforms. While there are other matters under dispute -- including how the deal will be released to the public -- the legal changes are at the heart of the current impasse.

Trump, who on Monday closely monitored equity markets driven lower by trade fears, spent Tuesday morning tweeting encouragement to farmers and others who will be harmed by new Chinese retaliatory tariffs.

"When the time is right we will make a deal with China. My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn't make any sense," Trump tweeted. "It will all happen, and much faster than people think!"

A Republican lawmaker who speaks with the White House about agricultural issues said the White House has not provided clarity on how it plans to pay for the $15 billion in aid to the farmers that Trump recently touted.

"$15 billion sounds good but where is it coming from? He hasn't asked Congress," the lawmaker said. "Agriculture is collateral damage in this deal."

Farmers, this lawmaker said, "are starting to freak out a little bit."

Another person close to the White House said Trump and his team are struggling to find a path forward.

"Things could spiral out of control for a while before we have a breakthrough," the person said.

A China deal has appeared within grasp at least twice before this latest breakdown, only to fall apart. In those instances, it took months before negotiations began again, though markets eventually stabilized in that span.

Trump plans to meet Chinese President Xi Jinping at the end of June at a G20 meeting in Japan, and no deal can be resolved until the two men at least speak, officials said. Both sides have long said that the negotiating teams can only go so far, and in the end it will come down the principals themselves.

The leaders are also expected at some point to speak by phone, but that call has not been scheduled, the officials added.

While the US negotiation team has been divided between pro-trade officials such as Mnuchin and more hawkish voices, including Lighthizer and trade adviser Peter Navarro, officials familiar with the matter say China's delegation has experienced its own rifts.

Some Chinese officials were worried that Liu, the lead negotiator, was conceding too much when it came to reforming Chinese law. By the time talks broke down, disputes over changing Chinese law had halted negotiations -- fueled in part by China's hesitation to appear like they're giving away too much.

CNN's Pamela Brown and Allie Malloy contributed to this report.

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