Trump to allow U.S. firms to sell technology to Huawei and promises farmers they would win from new talks, in wide-ranging news conference


JUNE 29, 2019

OSAKA, Japan —President Trump on Saturday agreed to scale back restrictions on Chinese technology giant Huawei and delay new tariffs from going into effect against Chinese goods as part of an effort to restart trade talks with Chinese leader Xi Jinping.

The major concessions, which came on the sidelines of the Group of 20 summit, came after more than a month of acrimonious fighting between two of the world’s largest economies. Trump expressed hope that the measures would lead to a large trade deal with China, though major issues remain and it’s unclear whether a long-term detente is within reach.

In exchange, Trump said China had agreed to purchase large amounts of farm products from U.S. companies. But he offered no specifics and Chinese officials did not confirm that they had made this offer.

“We discussed a lot of things and we’re right back on track,” Trump said after he met with Xi. “We’ll see what happens. We had a really good meeting.”

Trump had Xi began negotiating a trade deal last December, but those talks faltered more than a month ago and Trump ratcheted up pressure on Beijing by slapping large tariffs on $200 billion in Chinese goods. When those talks were unraveling, the U.S. Commerce Department imposed severe restrictions on Huawei, making it nearly impossible for U.S. companies to do business with the firm. This enraged many Chinese leaders and further imperiled relations between both countries.

A number of Democrats and Republicans had cheered Trump’s crackdown against Huawei, but Trump said Saturday he had agreed to lift some of his new restrictions after discussing the matter with Xi. He said he would allow U.S. technology companies to sell their products to Huawei, something that had been banned under his recent action, and that he would be meeting with aides very soon about rolling back even more restrictions.

“We had a very, very good meeting with China, I would say probably even better than expected. And the negotiations are continuing.”

During a wide-ranging news conference, Trump was asked what he received in return. He said China had agreed to purchase large amount of U.S. farm products, but he has said this before numerous times and farmers have complained that those orders have never materialized.

“We are going to give them lists” of farm products to buy, Trump said. He said there would be “tens of billions of dollars” coming in, but offered no specifics of what he was referring to.

The meeting with Xi appeared to defrost, for now, the chilly relations between both countries. Trump said he and Xi dined together Friday and then met again for more than an hour on Saturday. The two hadn’t met since talks fell apart more than a month ago.

Their interaction was being watched closely by business groups, farmers and U.S. political leaders. Some feared a prolonged standoff between two of the world’s most powerful countries could damage the global economy.

Before the meeting, Trump had bemoaned how previous efforts to broker a trade deal had fallen apart, though he didn’t directly blame Xi.

During his news conference, Trump said his effort to rewrite trade rules, cut taxes and scale back regulations was helping the U.S. economy thrive. He said this contrasts sharply with the economic agenda of Democrats running for president, though Democrats have accused him of employing a reckless approach to trade that has made U.S. workers and consumers pay higher prices for his impulsive decisions.

Trump has accused China of a range of unfair trade practices, including the theft of intellectual property, unfair subsidies and currency ma­nipu­la­tion, among other things. Some of his allegations aren’t backed up by data, but a range of experts and U.S. political leaders have agreed that China has violated trade rules to win an advantage over U.S. companies.

The future of these talks could have major economic consequences for both countries, and political consequences for Trump. The U.S. president has already had to dispatch more than $20 billion in payments to farmers to quell a rebellion from many who had alleged they were caught in the midst of the trade war.

Reading off a piece of paper when reporters were in the room, Xi was careful not to reveal his strategy in dealing with the U.S. leader.

“China and the United States both benefit from cooperation, and lose in a confrontation,” Xi said. “Cooperation and dialogue are better than friction and confrontation.”

Some White House officials had hoped the meeting would serve as a way to restart negotiations that had begun in earnest last year only to unravel more than a month ago when White House officials accused the Chinese of backtracking on some commitments. Chinese officials responded by saying they had not agreed to the things the White House officials had alleged.

Xinhua News, a state-run entity, reported after Trump’s meeting with Xi that the U.S. would hold off on imposing new tariffs because talks had resumed. Trump had threatened to slap a 25 percent tariff on more than $300 billion in Chinese imports, but he had suggested he might delay these if talks restart.

A number of top White House officials sat in on the Saturday meeting, including U.S. Trade Representative Robert E. Lighthizer, Secretary of State Mike Pompeo, Treasury Secretary Steven Mnuchin and top trade adviser Peter Navarro.

Trump’s decision to temporarily postpone — it’s unclear for how long — any new tariffs against Chinese imports could offer short-term relief to hundreds of U.S. businesses, which have petitioned the White House to be exempted because they say there would be massive costs to their companies. The tariffs could have gone into effect within days if Trump didn’t order them halted.

Tariffs are a type of tax paid by companies that import products, and many firms have asked the Commerce Department to be exempted from new tariffs because they say they can’t import the products from elsewhere. Trump has said this hard-line tactic with China is the only way to try to force the country to change its trade practices, and he has also said the billions of dollars in tariff revenue that the United States has reaped in the past year validates his approach.

It’s unclear where the talks might go. Both leaders have shown a willingness to let the fight drag on for much longer, though Trump could face political pressure to wrap up the standoff soon, given concerns about the strength of the U.S. economy and his reelection bid next year.

Trump imposed tariffs on numerous Chinese goods last year, and these penalties grabbed the attention of Xi and others. During the G-20 summit in Argentina in December, Trump and Xi agreed to begin negotiations to resolve trade differences. While the two countries were negotiating, Trump agreed to hold off on further tariffs.

But talks broke down more than a month ago, and Trump swiftly moved to toughen tariffs and propose new ones. Trump’s existing tariffs on Chinese goods cover a range of business products, industrial equipment and many consumer goods. But his proposed tariffs would hit everything else, including many electronics and consumer products, and businesses have warned those costs would be passed along to U.S. consumers.

Trump last week said he was considering levying a 10 percent tariff on this final batch of products, which he estimated to cover more than $300 billion in goods. Trump has often threatened tariffs only to back down at the last minute, confusing business leaders as they try to plan investments.

Again and again during his presidency, Trump has turned to tariffs as a way to try to force other countries to cut a deal. He has called himself a “Tariff Man,” despite a long-standing GOP push to embrace free trade and reduce import and export barriers.

When the United States and China were negotiating the trade deal earlier this year, White House officials were focused on a 150-page document that they felt captured the necessary changes they wanted to see from the Chinese government to rebalance the economic relationship.

The document would have addressed China’s currency policy, its government support for private companies, its insistence that U.S. companies transfer technology to the Chinese, and the theft of intellectual property. The White House has also pushed China to stop dumping lower-cost products, such as steel and aluminum, on the world market in a way that depresses prices. And Trump wanted China to purchase many more U.S. products, particularly agriculture, to reduce what he views as a financial imbalance between the two nations.

President Donald Trump calls on a reporter to ask a question during a news conference following the G-20 summit in Osaka, Japan, on Saturday. – Susan Walsh/AP

Many Democrats and Republicans have agreed with Trump that China should change its behavior, but no U.S. leader has taken Trump’s approach before because of the complicated economic and security relationship between the two countries.

But Trump has used a much different strategy.

Just days after the China talks broke down earlier this year, the Commerce Department announced it was cracking down on Huawei in a way that could make it very hard to do business. White House officials said the crackdown was due to violations of U.S. law, but Trump has said publicly that he would be open to easing off the company as part of the trade talks.

Trump said Saturday that part of his decision to ease the restrictions on Huawei was his desire to help U.S. companies. He said he would be meeting soon with other government officials about scaling back his recent restrictions on Huawei even more, but he said no decisions had been made.

There are still several people in the White House, including Navarro, pushing Trump to drive a hard bargain with the Chinese.

Navarro walked past reporters after the meeting with Xi Saturday afternoon. He was asked how it went and did not answer, but gave a shrug with both hands.

Courtesy/Source: Washington Post