White House hopes for trade ‘breakthrough’ with China at G-20

Top White House economic adviser Larry Kudlow on Tuesday expressed hope President Trump could achieve a “breakthrough” with Chinese President Xi Jinping on trade at an upcoming summit meeting, even as the U.S. president threatened Beijing with additional tariffs.

“President Xi has an opportunity to change the tone and the substance of these talks. It’s a big opportunity. President Trump has indicated he is open. Now we need to know if President Xi is open,” Kudlow told a group of reporters at the White House.

{mosads}Trump and Xi plan to have dinner together on Saturday in Argentina at the Group of 20 (G-20) economic summit amid escalating trade tensions between the world’s two largest economies.

Stock market losses and other signs of economic distress have raised pressure on both nations to reach a settlement, but Trump has shown few signs he is willing to remove tariffs on China if Xi does not agree to key concessions.

Kudlow pointed to Trump’s comments to The Wall Street Journal, in which the president threatened to impose tariffs on all Chinese imports if Xi does not agree to a deal, to underline the president’s desire to “keep his promise” to change Beijing’s economic relationship with Washington.

“The president has said, look, he’s perfectly happy to stand on his tariff policies,” Kudlow said later at a televised briefing at the White House.

Trump was more explicit on Monday, telling the Journal that “if we don’t make a deal, then I’m going to put the $267 billion additional on” China at a rate of 10 or 25 percent. He also said it is “highly unlikely” he would agree to hold off on raising the existing tariff rate on $200 billion in Chinese goods to 25 percent.

Kudlow suggested there is no formal agenda for Trump and Xi and declined to outline what a successful deal might look like.

But he said the two leaders will address longtime irritants such as forced technology transfers, alleged intellectual property theft, ownership of American companies in China, high trade barriers and cybersecurity.

“This is an opportunity to break through what has been disappointing discussions in the last seven, eight, nine months,” the adviser said. “From my perspective as a free trader, I have been extremely disappointed with China’s unsatisfactory responses. They have to do more. They must do more.”

The president has a full diplomatic plate at the Buenos Aires summit, with meetings lined up with Russian President Vladimir Putin, German Chancellor Angela Merkel, Japanese Prime Minister Shinzo Abe and Argentinian President Mauricio Macri.

Trump also plans to participate in a signing ceremony for the revised North American Free Trade Agreement with Mexico and Canada on the sidelines of the G-20.

But the main event will be the first meeting between Trump and Xi since trade tensions have flared. Kudlow and others have expressed cautious optimism about a breakthrough since the president phoned his counterpart last month to discuss a potential deal.

Trump will go into the meeting following General Motors’s decision to lay off thousands of workers and shutter as many as four U.S. factories, a move that could weaken his leverage with Xi. The closures are set to affect plants in Ohio and Michigan, states Trump won in 2016, and have been blamed in part on steel and aluminum tariffs on China that increased GM’s production costs.

Kudlow described the mood in the White House over the announcement as “disappointment spilling over into anger,” a sentiment he relayed to GM CEO Mary Barra on behalf of Trump in a Monday meeting.

But he insisted the U.S. has the upper hand with China, pointing to other strong economic indicators and China’s sputtering stock market.

“With respect to the economics, we are in a very strong position and China is not,” he said.

The list of officials attending the meeting is still being ironed out, but Kudlow confirmed White House trade adviser Peter Navarro, a vocal China hawk, will not be in attendance.

Kudlow downplayed the notion Navarro was being snubbed in an effort to present a friendlier face to the Chinese.

“Limited space at these events. I wouldn’t read a thing into that,” Kudlow said.

U.S. Trade Representative Robert Lighthizer will be in attendance at the G-20.

White House spokeswoman Lindsay Walters said Navarro typically does not attend international summits.

— Updated 1:57 p.m.