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White House Presses China’s Xi Before Trade Talks With Trump

Leaders will break bread amid impasse, tensions Saturday night at G20 summit

U.S. and Chinese flags on a table where military leaders from the two countries met in 2014. Four year later, the economic giants are in the midst of a bitter trade dispute. Depsite President Trump’s tariff's little progress has been made, an official said Friday. (U.S. Army Photo by Sgt. Mikki L. Sprenkle)
U.S. and Chinese flags on a table where military leaders from the two countries met in 2014. Four year later, the economic giants are in the midst of a bitter trade dispute. Depsite President Trump’s tariff's little progress has been made, an official said Friday. (U.S. Army Photo by Sgt. Mikki L. Sprenkle)

The White House wants to pressure Chinese President Xi Jinping ahead of a high-stakes dinner with President Donald Trump during which the two leaders will attempt to make some progress on long-stalled trade talks.

Lawrence Kudlow, Trump’s chief economic adviser, dismissed Wall Street talk of a coming recession at home. In fact, he said Trump administration officials view the state of the American economy as a major leverage point going into the Saturday Trump-Xi meeting.

“I don’t see any recession in sight,” Kudlow told a group of reporters at the White House Tuesday morning. “We’re strong. They’re not.

“Is there a market that’s done worse [this year] than China’s?” he asked before saying Beijing is dealing with an economy that has “big problems.”

Kudlow declined to label the Saturday evening meeting at a G20 summit in Argentina a make-or-break session. But he made clear it is up to Trump and Xi to revive negotiations that have failed to produce anything close to an agreement as relations between the two economic powers have chilled amid a tariff battle.

“This is an opportunity for President Xi to break through what have been disappointing discussions in the last 7 or 9 months,” Kudlow said, describing talks between the two countries as going nowhere because the Chinese are “so resistant to change.”

John Bolton, White House national security adviser, tried to tamp down expectations for the dinner meeting, saying the goal is for the leaders to map out a path toward a final deal for their staffs to try to finalize.

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Existing tariffs will be on the table when the two leaders break bread — Kudlow suggested Argentinian steak also could be on the menu. But the duo’s conversation won’t stop there.

Trump told advisers Tuesday “there’s a good possibility a deal can be made,” Kudlow said later during a rare White House briefing. “And he is open to that.”

Trump also told his aides he is willing to move forward with additional tariffs totaling over $250 billion if no deal is made soon.

Among the other trade-related matters they will likely discuss are intellectual property disputes, forced technology transfers demanded of U.S. companies, forced joint ventures, non-tariff barriers on agricultural and industrial goods, and cybersecurity matters.

“It’s the same list,” a clearly frustrated Kudlow said. “We haven’t seen much change.”

The dinner meeting will bring “an opportunity to turn a new page” and to “break through” the impasse,” Kudlow said, adding of Xi and his aides: “They have to do more, they must do more.”

As a candidate, Trump vowed to usher in a tougher-on-China policy. Even when Xi responded to U.S. tariffs with his own that were tailored to hurt states and districts that broke for Trump in the 2016 election, the U.S. president held firm.

“You bet he means it,” Kudlow said of his boss’s intention to force China to play by international rules on trade. “I hope they understand that. I’m not sure they do.”

Like other senior Trump administration officials, Kudlow said U.S. demands and requests for changed Chinese trade tactics have been communicated to Beijing over and over, but Xi has yet to budge.

The pressure on Xi comes as one prominent Wall Street investment shop says Trump’s tariffs are contributing to a slowing Chinese economy.

“Assuming that the U.S. and China are not able to defuse trade tensions at the G20 meeting later this month, we believe that tariff-related impacts to the Chinese economy are likely to become evident in economic data during the final three months of 2018,” according to a Wells Fargo white paper.

“We believe that risk-off related market sentiment could quickly return should business and consumer confidence, household spending, industrial production, and trade all unexpectedly decelerate,” the firm wrote.

The chief White House economic adviser also was asked about General Motors’ Monday announcement it is ceasing production at facilities in Ohio, Michigan, Maryland and Canada to cut costs and shift to models consumers want. He described the president as “very cross with” Mary Barra, the company’s CEO.

In one breath, Kudlow acknowledged the automaker merely made “business decisions. But in another, he said Trump feels “they turned their back on him.” That’s because the president pushed for provisions in a new U.S.-Mexico-Canada trade pact designed to help the American auto industry.

And, for Trump, most things are transactional. He places a premium on loyalty, meaning he hopes Barra will make good on her alleged willingness — stated directly to Trump, he says — to shift work on other GM products to the affected plants. Kudlow also said some of the workers at the Ohio, Michigan and Maryland facilities could be transferred to other GM plants.

“That’s possible,” he said, but declined to offer specifics of his Monday meeting with Barra or her phone conversation with the president.

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And when it comes to Xi, Trump also puts their relationship at a premium. He often calls his Chinese counterpart “a friend” and notes they get along well.

“There’s a gap,” Kudlow said about U.S. and Chinese trade views. “The question is can we bridge that gap?”

Lawmakers have expressed concerns about Trump’s trade tiff with Beijing, including the impact on U.S. farmers.

“I am hopeful that we will not need another subsidy program for our farmers. Our farmers would much rather grow their goods and make sure that they are getting out to the resting of the world, absolutely,” GOP Sen. Joni Ernst of Iowa.

“But I’ve done a number of farmer roundtables all across the state of Iowa,” she told CBS’s “Face the Nation” earlier this month. “And at the last one I held, the very last speaker, a middle-aged farmer, he stood up and said, ‘I understand why President Trump is doing this. However, what I don’t understand is why someone didn’t do it sooner.’ So they understand.”


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