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Trade war

Trump 'likes what he sees' in trade deal, Kudlow says

China to waive tariffs for some US soybeans and pork

U.S. President Donald Trump seen leaving the Oval Office: The president will make the final call after reviewing the latest version of the first-phase trade deal, his top economic adviser said Dec. 6.   © Reuters

NEW YORK/BEIJING -- The U.S. and China are "close" to a phase one trade deal, and President Donald Trump is happy with the progress of the talks, White House economic adviser Larry Kudlow said on Friday.

Speaking on Bloomberg TV, Kudlow said the two sides are in discussions "almost around the clock," with deputy-level negotiators having met as recently as Wednesday evening.

The president "basically likes what he sees," he said.

"Now some of the most delicate matters have to be adjudicated, discussed, analyzed and evaluated," Kudlow said. "And then it'll be presented to President Trump, and he'll take a look at it."

On the Dec. 15 deadline for a new round of tariffs to kick in if no deal is reached, the adviser said it will ultimately be the president's call.

Larry Kudlow, director of the U.S. National Economic Council, speaks to journalists outside the West Wing of the White House on Dec. 6.   © Reuters

Kudlow also said that there are no plans for Trump and Chinese President Xi Jinping to meet face to face. "If ... you have an agreement, the two heads of state don't necessarily have to sign it, or at least simultaneously in the same room. You could begin the signing process at the ministerial level," he said.

While emphasizing that America always stands for freedom and democracy, Kudlow said recent developments in Hong Kong are not interfering with the trade negotiations. "I don't think at this stage, and I'm pretty confident about this, that the difficulties in Hong Kong -- and, again, we have come out on the side of the freedom fighters -- those have not spilled over into the trade talks," he said.

Back in Beijing, the Chinese government plans to waive tariffs on certain U.S. soybeans and pork, seeking to allay concerns among American farmers in a show of goodwill as the two sides near a partial trade deal.

The State Council said Friday that it is granting exemptions "in light of applications submitted by related enterprises," under a framework announced in September after Trump delayed a round of duties on Chinese imports. Beijing has imposed additional tariffs of 30% on American soybeans and 60% on American pork.

The announcement comes just over a week before the postponed American tariffs are due to take effect. Prospects of a deal have looked more uncertain lately, with Trump saying Tuesday that one might not be reached until after next year's U.S. presidential election.

But negotiating teams on both sides remain in close communication, Commerce Ministry spokesperson Gao Feng told a regular news conference Thursday.

After Beijing began granting waiver requests from importers, U.S. shipments of soybeans to China surged 17-fold in October from the previous year, while pork jumped 15-fold. But worries arose last month in the American agriculture industry about the tariff-free quota being used up, potentially spurring Chinese buyers to switch to South American suppliers.

While Beijing has yet to announce an actual expansion of the quota, Friday's statement seems intended to address the issue.

China imposed tariffs of 25% on U.S. soybeans and pork in July 2018 as a countermeasure to tariffs levied by Washington.   © Reuters

For the interim agreement, Washington has pressed for China to step up purchases of American farm goods, while Beijing has demanded the removal of punitive tariffs imposed by the U.S. over the course of the trade war.

China has reportedly balked at American pressure to commit to a specific dollar figure for additional imports, as it could end up being forced to buy more should prices fall significantly. Friday's statement avoided any mention of concrete figures, saying only that purchases will be made independently by individual companies.

Meanwhile, the U.S. has been reluctant to scrap its tariffs in the partial deal. Washington has stipulated conditions for doing so that are completely unacceptable to the Chinese side, a source familiar with the negotiations said.

Beijing is showing signs of bending. Gao stated in previous news conferences that a phase 1 deal should involve both sides eliminating additional duties. But he changed this phrasing on Thursday, referring only to lowering the tariffs.

Some observers had expected talks to be hindered by Trump's recent signing of legislation supporting human rights and democracy in Hong Kong, as well as a bill passed by the House of Representatives this week calling for sanctions against China over its reported crackdown on the Uighur Muslim minority.

The impact has not been positive, but the two issues are not directly linked, according to a source familiar with the overall structure of the negotiations.

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