Editorial | Unpredictable Trump is obstacle to reaching an interim trade deal
- A ‘phase one’ pact that defuses tension is a necessary step forward, but that requires both Washington and Beijing to take a pragmatic approach
The Trump administration’s latest 90-day extension of a waiver of a ban on the sale of certain products to China’s Huawei Technologies is a reminder that the two economic giants need one another and that there are no winners from their trade war. The waiver is for the benefit of American suppliers of hi-tech components rather than Huawei. It strikes a realistic note to slow progress towards a “phase one” deal to end the trade conflict. Under such a deal, the United States would drop some tariffs in imports from China in exchange for Beijing resuming purchases of American farm goods and other products. The ban on dealing with Huawei reflects concerns that some of its activities go against US national security interests, including violating sanctions against Iran. The waiver reflects domestic political concerns, ahead of an election year, about a backlash against bans on Huawei that affect rural communications in American states where President Donald Trump counts on strong support.
The waiver came with news that the phase one talks had hit a number of barriers, with a new 15 per cent tariff on US$156 billion worth of Chinese products still set to take effect on December 15. The sticking points are the size of agricultural purchases from the US and intellectual property protection, according to Chinese observers. Their assessment came after a phone discussion between Vice-Premier Liu He, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. Lighthizer and Mnuchin are not so much the problem as their boss. In what has been dubbed Trump’s made-for-TV trade war, his unpredictable behaviour has done nothing to shorten it. For example, a day after the Ministry for Commerce said the two sides had agreed to remove tit-for-tat tariffs in phases once their leaders had signed an interim deal, Trump denied this. It has since also been reported that Trump was not happy with a proposal that Beijing resume buying about US$20 billion worth of American farm products, instead pressing his advisers to demand much more.