President Donald Trump’s decision Saturday to relax limits on Chinese telecommunications giant Huawei and to delay new tariffs on Chinese goods may revive stalled trade talks with Beijing, but it leaves negotiators confronting the same tough issues that derailed negotiations in early May.
Trump’s move – which came in a meeting with Chinese President Xi Jinping at the Group of 20 summit in Japan – was welcomed by business groups that have been hurt by multiple rounds of tariffs on Chinese goods and feared greater damage if the president proceeded with plans to tax a further $300 billion in imports.
But lawmakers in both parties objected to his decision to allow at least some U.S. companies to continue supplying Huawei, despite last month’s Commerce Department order to halt sales to the company because it imperiled U.S. national security.
“If President Trump has agreed to reverse recent sanctions against #Huawei he has made a catastrophic mistake,” Sen. Marco Rubio, R-Fla., tweeted Saturday morning. “It will destroy the credibility of his administrations warnings about the threat posed by the company, no one will ever again take them seriously.”
The president defended the change on Twitter later Saturday, saying it would not “impact our National Security.” He also said he was “in no hurry” to reach a deal with Beijing, “but things look very good!”
During a 74-minute news conference following his meeting with Xi, the president provided scant details of the plan to resume negotiations that collapsed six weeks ago amid U.S. complaints of Chinese backsliding.
Trump announced no date for his chief negotiator, U.S. Trade Representative Robert Lighthizer, to meet with Chinese Vice Premier Liu He, a Xi confidant who helms Beijing’s bargaining team. The president also set no new deadline for reaching a deal.
In exchange for flexibility on Huawei, Trump said China had agreed to large purchases of U.S. farm goods starting “almost immediately.” But he disclosed no specifics and Chinese officials did not confirm the offer.
“We discussed a lot of things and we’re right back on track,” Trump said. “We’ll see what happens.”
China’s Foreign Ministry quoted Xi as telling Trump that any “negotiations should be equal and show mutual respect.”
Fresh trade talks could have major economic consequences for both countries and Trump’s reelection hopes. The U.S. president already has had to allocate $28 billion in aid to quell an outcry from farmers who say they are trade war victims.
“They put a pause on further escalation and took the temperature down a little bit,” said Myron Brilliant, executive vice president of the U.S. Chamber of Commerce. “We’ll see if it yields progress in the way we need progress to be made.”
The president’s concessions followed more than a month of acrimony between the world’s two largest economies. Trump expressed hope that the measures would lead to a “very historic” trade deal with China, though major obstacles remain.
“This is a temporary truce,” said Ely Ratner, who was a national security aide to Vice President Joe Biden. “They’re not on the way to resolving the fundamental issues at the center of the dispute.”
The two sides are split over whether and how quickly to remove the trade barriers they have erected over the past year as well as provisions for enforcing a deal and the details of increased Chinese orders for American agricultural, energy and industrial products.
“Both sides are just playing for time,” said Scott Kennedy, a China adviser at the Center for Strategic and International Studies. “I don’t see this as any kind of breakthrough.”
Business groups – including many who had petitioned the White House for waivers from the threatened tariffs – welcomed the results of the Trump-Xi dialogue. John Neuffer, president of the Semiconductor Industry Association, called the president’s decision “good news for the semiconductor industry, the overall tech sector and the world’s two largest economies.”
The National Retail Federation, a vocal opponent of Trump’s tariffs, said it hoped the cease-fire “will result in a constructive approach to working with China to deliver significant reforms rather than one that punishes American consumers and threatens U.S. jobs through tariffs.”
The two leaders began negotiating last Decemberat the G-20 summit in Buenos Aires, but talks faltered in early May. In response, Trump more than doubled tariffs on $200 billion in Chinese goods and threatened to hit an additional $300 billion in imports with new levies.
Nine days after the impasse, the Commerce Department prohibited U.S. companies from doing business with Huawei without a government license. The Chinese company, a global leader in next-generation communications networks with nearly $105 billion in sales last year, depends upon U.S. companies for computer chips.
Commerce said it acted because “there is reasonable cause to believe that Huawei has been involved in activities contrary to the national security or foreign policy interests of the United States.”
U.S. officials have said the company has links to the Chinese government and its equipment could be used to disrupt or spy on American communications.
Before the president’s comments, U.S. companies would have been forced to halt all sales to Huawei as of August 19.
The president signed an executive order in May to prevent American companies from using Huawei gear in their next-generation 5G networks and has been trying for months to convince allied governments to follow suit – an effort likely to be disrupted by Saturday’s about-face.
Trump said he would now allow U.S. technology companies to supply Huawei “equipment where there is no great national emergency problem with it.” But he declined to elaborate until he met with his national security team in the next few days.
In Washington, critics were quick to pounce.
“Huawei is one of few potent levers we have to make China play fair on trade,” Senate Minority Leader Chuck Schumer, D-N.Y., tweeted. “If President @realDonaldTrump backs off, as it appears he is doing, it will dramatically undercut our ability to change China’s unfair trades practices.”
Some analysts compared the president’s move to a similar decision last year involving ZTE, another Chinese telecommunications company that had been blacklisted after pleading guilty to violating U.S. sanctions on Iran and North Korea and then being caught repeatedly lying to the U.S. government about its compliance with the settlement of civil and criminal charges.
After Xi personally complained to Trump about the potential loss of Chinese jobs, the U.S. president removed ZTE from the Commerce Department “entity list,” settling instead for the company’s payment of a $1 billion fine.
“As Trump did with ZTE, it appears he’s willing to accept a fistful of dollars while trading away our security,” said Michael Wessel, a member of the U.S.-China Executive and Security Review Commission. “But we need to see the full scope of his handout to Huawei.”
Indeed, Trump’s latest decision renewed doubts about his commitment to his administration’s confrontational stance toward China on issues including human rights in majority-Muslim Xinjiang province and the disputed waters of the South China Sea.
Asked by a reporter to characterize the U.S. relationship with China, Trump said: “I think we’re going to be strategic partners. I think we can help each other.”
Those comments were at odds with months of tough rhetoric from Vice President Mike Pence, Secretary of State Mike Pompeo and national security adviser John Bolton as well as the administration’s official defense and foreign policy statements, according to Kennedy.
Several senior administration officials sat in on the Saturday meeting, including Lighthizer, Pompeo, Treasury Secretary Steven Mnuchin and trade adviser Peter Navarro.
Some White House advisers, notably including Navarro, are pushing Trump to drive a hard bargain with the Chinese.
Navarro walked past reporters after the meeting with Xi on Saturday. He was asked how it went and did not answer, but gave a two-handed shrug.
The trade talks will resume against a more confrontational backdrop as public opinion sours on China. In a survey for the Chicago Council on Global Affairs, 63 percent of the public called China a U.S. adversary, up from 49 percent last year.
“There’s been a pretty sharp shift toward a more confrontational posture toward China,” said Aaron Friedberg, a professor at Princeton University and a former China adviser to Vice President Dick Cheney. “The only place that’s not certain is at the top. He does seem to run hot and cold. There’s a question how much he cares about the issues other than trade.”
(c) 2019, The Washington Post · David J. Lynch, Damian Paletta, David Nakamura, Simon Denyer