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Trade war

Trump wants to sign phase 1 China trade deal in Iowa

President says he hasn't agreed to tariff rollback

U.S. President Donald Trump speaks to reporters as he departs for travel to Georgia from the South Lawn of the White House in Washington on Nov. 8.   © Reuters

NEW YORK -- President Donald Trump said Friday that the U.S. has not actually agreed to roll back any tariffs on China, contradicting earlier statements from both sides.

"I haven't agreed to anything," Trump told reporters. "China would like to get somewhat of a rollback, not a complete rollback, because they know I won't do it."

"Frankly, they want to make a deal a lot more than I do," he said, adding later that the phase 1 deal, if finalized, would be signed in the U.S.

Trump had originally indicated that he could sign a phase 1 deal with Chinese President Xi Jinping at mid-November's Asia-Pacific Economic Cooperation summit in Chile, since canceled.

"Assuming we get it -- you know I never like to talk about things until we have them -- but it could be Iowa or farm country or someplace like that," Trump said.

The Dow Jones Industrial Average was down about 90 points shortly after Trump's remarks, casting doubts over the level of consensus between the U.S. and China. The two countries are widely expected to ink a deal before the end of the year.

Chinese Commerce Ministry spokesman Gao Feng said Thursday that the two sides have "agreed to cancel the tariff increase in stages with the progress of the agreement." A U.S. official later also confirmed that tariff rollbacks would form part of the agreement.

But Trump's Friday statement echoes trade adviser Peter Navarro's comments the day before on the Fox Business channel.

"There is no agreement at this time to remove any of the existing tariffs as a condition of the phase 1 deal, and the only person who can make that decision is President Donald J. Trump, and it's as simple as that," Navarro said.

Navarro, the White House director of trade and manufacturing policy, is a leading China hawk with a laser focus on overhauling the Asian country's industrial policies. Maintaining that China has a history of breaking promises, his camp stands firmly against granting concessions.

Also on Thursday, White House economic adviser Larry Kudlow indicated that talks are moving forward on that front. "If there's a phase 1 trade deal, there are going to be tariff agreements and concessions," he said, according to Bloomberg.

But neither the White House nor the Office of the U.S. Trade Representative issued an official statement on the matter that day. Navarro's interview suggests that China hard-liners in the administration are digging in their heels on a tariff rollback.

Michael Hirson, an analyst at think tank Eurasia Group, said that further progress from here on out may prove difficult. "If phase 1 is finalized, it is unlikely to pave the way for a phase 2: The U.S. will set a high bar for any additional tariff relief, and there are no signs that Beijing is contemplating major concessions on sensitive issues such as industrial subsidies and cyber security," he wrote in a memo Friday.

"The main watchpoint over the next week is further clarity on when and where the two presidents might meet to finalize the deal," Hirson explained. "The setting -- including whether a meeting happens in the U.S. or elsewhere -- will signal the expectations on each side. Timing that is earlier rather than later would indicate some degree of momentum and urgency and thus be positive for the outlook."

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