U.S. President Donald Trump said on Friday there was “a very good chance” the United States would strike a deal with China to end their trade war and that he was inclined to extend his March 1 deadline to reach an agreement.
U.S. and Chinese negotiators had made progress and would continue this week’s round of negotiations through the weekend, Trump told reporters in the White House as he met his top negotiators and their counterpart, Chinese Vice Premier Liu He.
“I think that we both feel there’s a very good chance a deal will happen,” Trump said.
Extending the deadline would mean Trump would put on hold a scheduled tariff increase to 25 per cent from 10 per cent on US$200-billion of Chinese imports into the United States.
That would prevent a further escalation in a trade war that has already disrupted commerce in goods worth hundreds of billions of dollars, slowed global economic growth and roiled markets.
Optimism the two sides would find a way to end the trade war lifted stocks on Friday, especially technology shares, while oil prices rose to their highest since mid-November, with Brent crude reaching a high of US$67.73 a barrel.
Trump and Treasury Secretary Steven Mnuchin said the two sides had reached an agreement on currency. Trump declined to provide details, but U.S. officials have long expressed concerns that China’s yuan is undervalued, giving China a trade advantage and partly offsetting U.S. tariffs.
The president said he would probably meet China’s President Xi Jinping in March in Florida, and the biggest decisions on the terms of the trade deal could come when they meet.
Xi sent a letter to Trump which an aide to Liu read out at the briefing on Friday. Xi called on negotiators to work hard to strike a deal that benefits both.
Trump indicated a deal with China may extend beyond trade to encompass Chinese telecommunications companies Huawei Technologies and ZTE Corp .
The Justice Department has accused Huawei of conspiring to violate U.S. sanctions on Iran and of stealing robotic technology from T-Mobile US Inc.
Chinese peer ZTE was last year prevented from buying essential components from U.S. firms after pleading guilty to similar charges, crippling its operations.
Trump appeared at odds with his top negotiator, United States Trade Representative Robert Lighthizer, on the preliminary terms that his team is outlining in memorandums of understanding for a deal with China.
Trump said he did not like MOUs, because they are short term, and he wanted a long-term deal.
“I don’t like MOUs because they don’t mean anything,” Trump said. “Either you are going to make a deal or you’re not.”
Lighthizer responded testily that MOUs were binding, but that he would never use the term again.
Reuters reported exclusively on Wednesday that the two sides were drafting the language for six MOUs covering the most difficult issues in the trade talks that would require structural economic change in China.
That marked the most progress the two sides have made toward a deal. But negotiators have struggled this week to agree on specific language within those memorandums to address tough U.S. demands for structural changes in China’s economy, sources familiar with the talks have told Reuters.
The MOUs would provide an outline for a deal, for specific details to be agreed by negotiators later. They are common in trade negotiations.
An industry official briefed on the talks said that if a framework deal can be reached, it may take another three to six months to fill in the details, and the two sides remain far apart on a mechanism to verify and enforce follow-through commitments China makes.
Lighthizer said negotiators had made a lot of progress this week on forced technology transfers, one of the more difficult issues. The U.S. alleges foreign firms in China come under pressure to transfer their technology to Chinese firms if they want to operate there. China denies this.
The two sides had struggled this week to agree on the specific language for the MOUs on other tough issues. Those include cyber theft, intellectual property rights, services, agriculture and non-tariff barriers to trade.
The U.S. Chamber of Commerce on Friday urged the U.S. government to ensure the deal was comprehensive and addressed core issues, rather than one based on more Chinese short-term purchases of goods.
Trump has demanded that China and other top trade partners take action to balance trade with the United States.
China has pledged to increase purchases of agricultural produce, energy, semiconductors and industrial goods to reduce its trade surplus.
China committed to buying an additional 10 million metric tons of U.S. soybeans on Friday, U.S. Agriculture Secretary Sonny Perdue said on Twitter.
The commitments are a “show of good faith by the Chinese” and “indications of more good news to come,” Perdue wrote.
China was the top buyer of U.S. soybeans before the trade war, but Beijing’s retaliatory tariffs on U.S. soybeans slashed business that had been worth $12 billion annually.