U.S., China could reach deal in August to stay tariffs

Analyst also says such an agreement could foreshadow a more hawkish U.S. approach to trade during the 2020 election season.    The United States and China could reach an agreement to resolve trade concerns in August, but any such arrangement would likely end during the 2020 presidential election cycle, American Enterprise Institute resident fellow Derek Scissors, who is directly familiar with the Trump administration’s positions on trade, said on Thursday.
   “I think that’ll hold for about a year and change, and when we get into the presidential election, we will have a protectionist Democratic candidate saying, ‘This is what Trump said in 2016, and this is what he did,’” Scissors said during a Washington International Trade Association (WITA) event. “And what he did is going to see a larger bilateral trade deficit, no fundamental change in Chinese practices, and the administration is going to get absolutely raked over the coals.”
   Scissors added in an email Thursday that he believes any forthcoming U.S.-China arrangement will end during the election campaign itself, “say, January 2020,” as Democratic candidates attack Trump for being “much weaker on China than he promised to be.”
   “President Trump’s stated positions on China trade are fairly close to Senator [Chuck] Schumer [D-N.Y.,] and the AFL-CIO, for example,” Scissors wrote in the email. “Style aside, a Democratic president could be more hawkish than Trump has been.”
   Among other measures, Trump during his 2016 presidential campaign said he would declare China a currency manipulator.
   Treasury did not find that China was a currency manipulator in its latest biennial report to Congress on the foreign exchange policies of major U.S. trading partners, released in April.
   The Trump administration has announced that it will levy $34 billion in tariffs across 818 tariff lines on imports from China, starting July 6, as another planned $16 billion in tariffs across 284 lines will be subject to a public notice and comment period, after the Office of the U.S. Trade Representative in a March report detailed findings that China imposes unfair commercial practices on U.S. companies.
   The first $50 billion in tariffs are planned to be assessed at a rate of 25 percent.
   Trump on Monday threatened tariffs of up to $450 billion annually against imports from China if trade actions between the two countries escalate.
   Tariffs above the first $50 billion in yearly import value would be assessed at a rate of 10 percent, according to Trump’s statement.
   White House trade adviser Peter Navarro during a call with reporters on Tuesday said that country has far more to lose than the United States in any trade war and mentioned the 2017 bilateral trade balance.
   China exported about $505.5 billion to the United States last year, while the U.S. exported about $130.4 billion to China in 2017.
   But Bruce Andrews, managing director of economic policy consultancy Rock Creek Global Advisors, who also spoke during the WITA event, said that China can sustain a lot more economic pain than the U.S. can, and its business community will “absolutely support” anything the Chinese government does.
   Though capacity exists for the United States to level more tariffs on China than vice versa, China has other ways to inflict damage on U.S. businesses, such as through slowing down customs checks, which it has done recently, he told American Shipper after the event.
   Andrews, who participated in five bilateral dialogues of the U.S.-China Joint Commission on Commerce and Trade (JCCT) and was deputy secretary of Commerce from July 2014 through the end of the Obama administration, said that the United States should not approach China on trade in a publicly hostile way and expect Beijing to respond.
   “It’s all brute force,” Andrews said of the Trump administration’s approach to China on trade. “Unfortunately, I don’t think that’s going to be successful.”