US stocks erased early losses on Thursday, after more reporting that the Trump administration is seriously engaging China on trade issues.
The top US trade official, Robert Lighthizer, who is seen as one of the more strident trade hawks in the White House, has told industry executives that the next round of tariffs on China is “already on hold,” according to a source cited by the Financial Times on Thursday.
The FT report also said “signs have emerged” that Lighthizer was “now more involved and participating in the negotiations,” though it did not provide evidence or sources for this assertion.
But soon after the report, the Office of the US Trade Representative denied the reporting, saying that “Ambassador Lighthizer has made no representations to industry executives that future Section 301 tariffs are on hold.”
Lighthizer has played a key role in negotiating trade deals with South Korea, Canada and Mexico. That is reportedly not lost on Beijing, with officials keen to engage with Lighthizer after having failed to seal a deal tentatively reached with Treasury Secretary Steven Mnuchin.
Trade adviser Peter Navarro, a staunch advocate of tariffs, was publicly sidelined this week – for the second time in his tenure with the Trump administration – after claiming in a speech last Friday that President Donald Trump was committed to a hard line with Beijing.
A string of comments from both the US president himself and his top economic adviser Larry Kudlow over the past several weeks indicated that there is movement toward a deal. News that Chinese Vice-Premier Liu He might be traveling to Washington ahead of a meeting between Trump and his Chinese counterpart, Xi Jinping was followed by word that China had provided the White House with a list of offers.
Experts are tempering optimism of anything substantial resulting from the Trump-Xi meeting at the Group of 20 summit, with some comparing the potential outcome with the agreement reached with the European Union last summer.
“At the G-20, Trump will likely do with Xi what he did with [European Commission President Jean-Claude] Juncker,” Evan Medeiros, a China expert at Georgetown University, was quoted by FT as saying. “They will walk out and say, ‘We need to do a deal,’ calling an effective ceasefire, and begin talking.”
There is also some speculation that Trump is wary of going into the meeting with Xi amid falling US stock valuations, and sees positive trade news as a tactic to boost the market ahead of the meeting.
POTUS “is VERY sensitive to the movements in the stock mkt. The last thing he wants to do is have the mkt flat on its back going into the #G20 mtg .. Therefore, we think it’s very likely that he’ll tweet [or leak] more positive [China] news” — Miller Tabak
— Carl Quintanilla (@carlquintanilla) November 15, 2018