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Trump Warms to Doing China Trade Deal Soon Ahead of Key Meeting

Published 2019-12-12, 11:00 a/m
Updated 2019-12-12, 11:41 a/m
Trump Warms to Doing China Trade Deal Soon Ahead of Key Meeting

Trump Warms to Doing China Trade Deal Soon Ahead of Key Meeting

(Bloomberg) -- President Donald Trump said the U.S. and China are very close to signing a “big” trade deal, sending stocks to new records on expectations that a tariff increase planned for Sunday will be called off while talks progress.

“They want it, and so do we!” he tweeted five minutes after stocks opened in New York.

Investors cheered Trump’s statement that the U.S. wants a deal with Beijing soon. That contrasted with remarks he made last week that he liked the idea of waiting until after the 2020 elections in the U.S. to sign a deal. The S&P 500 Index advanced to an intraday high and the MSCI All-Country stock index to its first record since January 2018.

The U.S. has added a 25% duty on about $250 billion of Chinese products and a 15% levy on another $110 billion of its imports over the course of a 20-month trade war. Discussions now are focused on reducing those rates by as much as half as part of a phase-one agreement Trump announced almost nine weeks ago.

Trump’s trade advisers are expected to lay out the options including a delay in the Dec. 15 tariffs at a White House meeting later Thursday, people familiar with the matter said. While that gathering may highlight continuing divisions among them over whether to hit Beijing with a new wave of tariffs, Trump’s tweet suggests he may be willing to forego escalation for now.

Officials from the world’s two biggest economies have been locked in negotiations on the phase-one deal since Trump announced it.

The new duties, which are due to go ahead at 12:01 a.m. Washington time on Sunday unless the administration signals otherwise, would hit some $160 billion in consumer goods from China including smartphones and toys.

Before today, Trump’s advisers have sent conflicting signals and stressed that he hadn’t made up his mind on the next steps. Advocates of delaying the tariff increase have argued that continued negotiations with Beijing will enable him to maintain a tough line with Beijing without the economic damage that more import taxes might bring.

The decision facing Trump highlights one dilemma he confronts going into the 2020 election: Whether to bet on an escalation of hostilities with China and the tariffs he is so fond of or to follow the advice of more market-oriented advisers and business leaders who argue a pause in the escalation would help a slowing U.S. economy bounce back in an election year.

Robert Lighthizer, the U.S. trade representative leading the negotiations with China, is in camp who sees progress in talks and wants them to continue without further escalation, according to people familiar with the discussions. That would set up a push to conclude the talks in January, possibly before a State of the Union address to Congress by Trump, should that happen.

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