Tag Archives: trade talks

China, U.S. to hold trade talks in October; Beijing says phone call went well

FILE PHOTO: Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019. REUTERS/Aly Song/File Photo/File Photo

BEIJING (Reuters) – China and the United States on Thursday agreed to hold high-level trade talks in early October in Washington, amid fears that an escalating trade war could trigger a global economic recession.

The talks were agreed to in a phone call between Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin, China’s commerce ministry said in a statement on its website. China’s central bank governor Yi Gang was also on the call.

“Both sides agreed that they should work together and take practical actions to create good conditions for consultations,” the ministry said.

“Lead negotiators from both sides had a really good phone call this morning,” ministry spokesman Gao Feng said in a weekly briefing. “We’ll strive to achieve substantial progress during the 13th Sino-U.S. high-level negotiations in early October.”

Gao also said Beijing opposes any escalation in the trade war.

Trade teams from the two countries will hold talks in mid-September before the high-level talks next month, the ministry said.

A spokesman for the U.S. Trade Representative’s office confirmed that Lighthizer and Mnuchin spoke with Liu and said they agreed to hold ministerial-level trade talks in Washington “in the coming weeks”.

News of the early October talks lifted most Asian share markets on Thursday, raising hopes these can de-escalate the U.S.-China trade war before it inflicts further damage on the global economy.

On Sunday, Washington began imposing 15% tariffs on an array of Chinese imports, while China began placing duties on U.S. crude oil. China said on Monday it had lodged a complaint against the United States at the World Trade Organization.

The United States plans to increase the tariff rate to 30% from the 25% duty already in place on $250 billion worth of Chinese imports from Oct. 1.

U.S. President Donald Trump had warned on Tuesday he would be tougher on Beijing in a second term if trade talks dragged on, compounding market fears that disputes between the United States and China could trigger a U.S. recession.

Chinese leaders will have a packed schedule next month, gearing up for National Day celebrations scheduled for Oct. 1.

They will also hold a key meeting in October to discuss improving governance and “perfecting” the country’s socialist system, state media has said.

(Reporting by Kevin Yao, Yawen Chen and Beijing Monitoring Desk; Editing by Paul Tait and Richard Borsuk)

Trump threatens new tariffs as U.S.-China trade tensions spike again

FILE PHOTO: Farmer Dave Walton holds soybeans in Wilton, Iowa, U.S. May 22, 2019. Picture taken May 22, 2019. REUTERS/Kia Johnson

By David Lawder and Andrea Shalal

WASHINGTON (Reuters) – U.S. President Donald Trump on Thursday moved to impose a 10% tariff on a remaining $300 billion list of Chinese imports starting Sept. 1, after U.S. and Chinese negotiators failed to kickstart trade talks between the world’s two largest economies.

The levies – which would hit a wide swath of consumer goods from cell phones and laptop computers to toys and footwear – ratchet up tensions in a war of tit-for-tat tariffs that have disrupted global supply chains and roiled financial markets for more than a year.

U.S. stocks fell after the news and oil prices plummeted, and further fallout was expected. The IMF has warned that tariffs already in place will shave 0.2% off global economic output in 2020.

The benchmark S&P 500, which had been in solidly positive territory on Thursday afternoon, lost significant ground after Trump tweeted about the tariffs, and was last down 0.6% on the day. Benchmark U.S. Treasury yields also fell.

“Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%,” Trump tweeted.

Trump also faulted China for not making good on promises to buy more American agricultural products and criticized China’s President Xi Jinping for failing to do more to stem sales of the synthetic opioid fentanyl.

The president’s tweets followed a briefing by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on their talks in Shanghai, their first face-to-face meeting with Chinese officials since Trump and Xi agreed to a trade ceasefire at a G20 summit in June.

The talks ended on Wednesday with little sign of progress, although both countries described the negotiations as constructive. Another round of meetings between the negotiators has been scheduled for September.

Trump had been pressing Xi to crack down on a flood of fentanyl and fentanyl-related substances from China, which U.S. officials say is the main source of a drug blamed for most of more than 28,000 synthetic opioid-related overdose deaths in the United States in 2017.

Xi promised Trump at a summit in Argentina in December that Beijing would take action. China had pledged that from May 1 it would expand the list of narcotics subject to state control to include the more than 1,400 known fentanyl analogs, which have a slightly different chemical makeup but are addictive and potentially deadly, as well as any new ones developed in the future.

Talks between the United States and China collapsed in May after U.S. officials accused China of pulling back from earlier commitments. Washington sharply hiked tariffs on $200 billion worth of Chinese goods and Beijing retaliated, escalating the trade dispute.

Trump subsequently threatened to impose 25% sanctions on the remaining $300 billion in Chinese imports, prompting warnings from Walmart and other major U.S. retailers of a sharp spike in consumer prices. Thursday’s tweets indicated those goods would face a lower tariff rate than initially threatened.

While the United States bemoans the lack of larger Chinese agricultural purchases, Beijing has been pressing Washington to relax restrictions on sales to Chinese telecommunications giant Huawei as it had promised.

The U.S. Department of Agriculture on Thursday confirmed private sales to China of 68,000 tonnes of soybeans in the week ended July 25.

The sale was the first to a private buyer since Beijing offered to exempt five crushers from the 25% import tariffs imposed more than a year ago. Soybean futures opened lower on Thursday as traders shrugged off the small amount, and losses accelerated after Trump’s tweets.

(Additional reporting by Stella Qiu and Beijing Monitoring Desk; additional reporting by David Lawder, Jonathan Landay and Andrea Shalal in Washington and Mark Weinraub and Karl Plume in Chicago; Editing by Sonya Hepinstall)

White House adviser doesn’t expect grand deal from next week’s China trade talks

White House chief economic advisor Larry Kudlow leaves after speaking with reporters on the driveway outside the West Wing of the White House in Washington, U.S. July 26, 2019. REUTERS/Yuri Gripas

WASHINGTON (Reuters) – White House economic adviser Larry Kudlow said on Friday he does not expect a grand deal from next week’s trade talks with China but that U.S. negotiators hoped to reset the stage for further productive talks on reducing trade barriers.

“They’re going to meet next week in Shanghai,” Kudlow said in an interview with CNBC. “I wouldn’t expect any grand deal. I think, talking to our negotiators, they’re going to kind of reset the stage and hopefully go back to where the talks left off last May.”

“We were doing well. No deal yet, but still on the structural issues, regarding IP (intellectual property) theft, forced transfer of technology, cyber interference, trade and non-trade, tariff barriers and so forth, certainly the enforcement mechanisms,” Kudlow added. “But if we were 90 percent there with 10 percent to go … I think our negotiators want to go back to that spot.”

Kudlow said the United States strongly expected China to make goodwill purchases of U.S. agricultural products.

The White House said on Wednesday that U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer would meet with Chinese Vice Premier Liu He for talks in Shanghai starting on July 30.

It would be their first face-to-face meeting since Presidents Donald Trump and Xi Jinping agreed to revive talks to end their yearlong trade war.

Talks collapsed in May after China reneged on promises made in earlier negotiations, U.S. government and private-sector sources said at the time.

The governments of the world’s largest economies have levied billions of dollars of tariffs on each other’s imports, disrupted global supply chains and shaken financial markets in their dispute over how China does business with the rest of the world.

(Reporting by Makini Brice; writing by David Alexander; editing by Jonathan Oatis)

Kudlow says U.S. expects China to start purchasing crops very soon

FILE PHOTO: White House chief economic advisor Larry Kudlow speaks with reporters on the driveway outside the West Wing of the White House in Washington, U.S. June 27, 2019. REUTERS/Yuri Gripas

WASHINGTON (Reuters) – White House economic adviser Larry Kudlow said on Thursday the United States expects China to start purchasing crops and U.S. agricultural products soon and noted that trade talks between the two countries are ongoing.

The United States and China agreed last month to restart trade talks that stalled in May. President Donald Trump agreed not to impose new tariffs and U.S. officials said China agreed to make agricultural purchases, but those have not yet materialized.

(Reporting by Jeff Mason; Editing by Chizu Nomiyama)

U.S., China to relaunch talks with little changed since deal fell apart

By David Lawder and Chris Prentice

WASHINGTON/NEW YORK (Reuters) – The United States and China are set to relaunch trade talks this week after a two-month hiatus, but a year after their trade war began there is little sign their differences have narrowed.

After meeting with Chinese President Xi Jinping in Japan just in late June, U.S. President Donald Trump agreed to suspend a new round of tariffs on $300 billion worth of imported Chinese consumer goods while the two sides resumed negotiations.

Trump said then that China would restart large purchases of U.S. agricultural commodities, and the United States would ease some export restrictions on Chinese telecom equipment giant Huawei Technologies.

But sources familiar with the talks and China trade watchers in Washington say the summit did little to clear the path for top negotiators to resolve an impasse that caused trade deal talks to break down in early May.

A U.S. official said last week the discussions were expected to resume with a phone call between U.S. Trade Representative Robert Lighthizer, Chinese Vice Premier Liu He and Treasury Secretary Steven Mnuchin.

A USTR spokesman said the call was expected this week, but gave no further details.

The United States is demanding that China make sweeping policy changes to better protect American intellectual property, end the forced transfer and theft of trade secrets and curb massive state industrial subsidies. At stake, U.S. officials say, is dominance of the high-tech industries of the future, from artificial intelligence to aerospace.

“We’ve had a change in atmospherics,” said Derek Scissors, a China expert at the American Enterprise Institute, a business-oriented Washington think tank. “While this is great for markets, the administration has not said one specific thing about how we’re unstuck.”

Scissors, who has at times consulted with Trump administration officials, said that both sides got what they wanted out of the summit — a lowering of the temperature and the avoidance of new tariffs that would have been painful for both sides.

“The pressure for one side to give into the other is diffused right now. I expect this to drag out for months,” Scissors added.

NO FIRM COMMITMENTS

Washington and Beijing appear to have different ideas of what the two leaders agreed in Osaka.

Three sources familiar with the state of negotiations say that the Chinese side did not make firm commitments to immediately purchase agricultural commodities.

One of the sources said Trump raised the issue of agricultural purchases twice during the meeting, but Xi only agreed to consider purchases in the context of a broader final agreement.

Other than a small purchase of American rice by a private Chinese firm, no purchases have materialized. Chinese officials and state media accounts in the past week have emphasized that any deal, including agricultural purchases, is dependent on removal of U.S. tariffs.

“The Chinese have been clear they didn’t promise anything,” said one source familiar with the talks.

“The idea they would give up their main leverage before getting anything doesn’t make sense. I could see them buying some pork and buying some soybeans, but it’s still going to be pennies.”

Trump administration officials have also downplayed the extent of pledges to allow Huawei to purchase U.S. technology products, with White House trade adviser Peter Navarro saying that only “lower-tech” U.S. semiconductors could be made available for sale to the company..

Reuters reported last week that the Commerce Department’s export control enforcement staff was told to continue to treat Huawei as a blacklisted entity as the department considers requests for licenses to U.S. firms to sell products and services to Huawei

Chinese officials point out that they only got the United States to concede on Huawei at the Osaka talks, rather than on their other demand, which was removing the existing tariffs.

So the focus on the upcoming talks will be the scrapping on the tariffs, they say.

A second source said that U.S. tariffs on $250 billion worth of Chinese goods and Chinese tariffs on $160 billion worth of U.S. goods could wind up being “the new normal.”

One Chinese official familiar with the situation said that trade talks would be re-started very quickly, but that there was a “fairly large gap” in the core demands of both countries and it would be a challenge to reach consensus on the toughest issues.

“The negotiating environment is even more severe,” the official said.

Another official said China remained concerned about the presence of hawks in the U.S. team, such as Trump advisor Peter Navarro.

“There are bullies there,” the official said.

The officials spoke to Reuters on condition of anonymity.

China’s foreign ministry cited Xi as telling Trump at Osaka that “on issues concerning China’s sovereignty and dignity, China must safeguard its core interests”.

A senior Beijing-based Asia diplomat said there would be pressure on China’s leadership not to give in to the United States and for any outcomes to seen as equal and balanced.

“A trade deal cannot be portrayed as a victory for the United States,” the diplomat said, citing conversations with Chinese officials.

WHICH TEXT?

There has been no indication the two sides will resume negotiations using a text that had been largely agreed before China backtracked on commitments in early May, prompting Trump to proceed with a long-threatened tariff hike to 25 percent on a $200 billion list of Chinese imports.

Beijing had cut out of that text commitments to make changes to its laws reflecting reform pledges, arguing that this would violate its national sovereignty.

Lighthizer has insisted on legal changes to make it more likely that Chinese reform pledges will be carried out.

Finding a way around this issue is paramount for talks. Beyond that, there are many other difficult issues to resolve, including the structure of an enforcement mechanism designed to hold the two sides to their pledges.

U.S. demands for curbs to provincial and local subsidies for Chinese state companies, access to China’s cloud computing market, agricultural biotech approvals and the ultimate size of China’s purchases of agricultural products are all divisive issues for the two sides.

Claire Reade, a former China trade negotiator at USTR who is now a Washington-based trade lawyer with the firm Arnold and Porter, said there was room on both sides to get a deal.

“It’s a question of political will and there are ways to maneuver around the current red flags that have been put in the ground,” Reade said. “Both President Xi and President Trump have to come out of this saying they stood strong, and they in-effect got a win.”

One way for China to avoid the appearance of giving in to U.S. demands is to take some legal steps on key issues before the deal is agreed. That way they can say they’re doing it on their own terms, she added.

(Additional reporting by Ben Blanchard in Beijing and Andrea Shalal in Washington; Editing by Simon Webb and Alistair Bell)

Trump officials say U.S.-China trade talks to resume next week

Workers load goods for export onto a crane at a port in Lianyungang, Jiangsu province, China June 7, 2019. Picture taken June 7, 2019. REUTERS/Stringer

By Jeff Mason

WASHINGTON (Reuters) – Top representatives of the United States and China are organizing a resumption of talks for next week to try to resolve a year-long trade war between the world’s two largest economies, Trump administration officials said on Wednesday.

“Those talks will continue in earnest this coming week,” White House Economic Adviser Larry Kudlow told reporters in a briefing.

An official from the Office of the U.S. Trade Representative said later that the two sides were in the process of scheduling a principal-level phone call with Chinese officials for next week.

The principal negotiators on the U.S. side are U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, while China’s top negotiator is Vice Premier Liu He.

The two sides have been in communication by telephone since last weekend, when U.S. President Donald Trump and Chinese President Xi Jinping agreed to relaunch talks that had stalled in May.

Kudlow was unclear about the timeline for relaunching face-to-face talks, saying that these would begin “soon” and that an announcement would be forthcoming.

“I don’t know precisely when. They’re on the phone. They’re going to be on the phone this coming week and they’ll be scheduling face-to-face meetings,” he said.

Talks between the two sides broke down in May after U.S. officials accused China of pulling back from commitments it had made previously in the text of an agreement that negotiators said was nearly finished.

The United States accuses China of allowing intellectual property theft and forcing U.S. companies to share their technology with Chinese counterparts in order to do business in China. It wants China to change its laws on those and other issues.

China denies such practices and is reluctant to make sweeping legal changes.

Both countries have levied tariffs on the other, but Trump made two major concessions at the meeting with Xi to get talks started again: he agreed not to put tariffs on some $300 billion in additional Chinese imports and to loosen restrictions on Chinese technology company Huawei.

China welcomed the U.S. decision not to put new tariffs on Chinese goods, commerce ministry spokesman Gao Feng told a regular media briefing on Thursday, but added the removal of existing U.S. tariffs was essential for a trade deal.

“The U.S. move to unilaterally increase tariffs on Chinese imports started the Sino-U.S. economic and trade frictions. If both sides could reach a deal, those tariffs must be completely removed,” said Gao.

The United States has 25% tariffs on $250 billion of Chinese goods now ranging from semi-conductors to furniture.

“We’ve been accommodative. We will not lift tariffs during the talks,” Kudlow said. “We are hoping that China will toe its end of it by purchasing a good many of American imports.”

Gao said China hoped the United States would follow through on Trump’s promise to ease restrictions on telecommunications giant Huawei.

Trump surprised markets on Saturday with an announcement that U.S. companies would be allowed to sell products to Huawei, which was placed on a so-called Entity List in May over national security concerns.

But industry and government officials are uncertain what the new policy will be.

The U.S. Commerce Department is reviewing license requests from U.S. companies seeking to export products to Huawei “under the highest national security scrutiny”.

(Reporting by Jeff Mason and David Lawder in Washington; Additional reporting by Stella Qiu; Editing by James Dalgleish and Lisa Shumaker)

Trump says China trade talks ‘back on track,’ new tariffs on hold

U.S. President Donald Trump and China's President Xi Jinping shake hands before their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque

By Roberta Rampton and Michael Martina

OSAKA (Reuters) – The United States and China agreed on Saturday to restart trade talks after President Donald Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei in order to reduce tensions with Beijing.

China agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table, Trump said. No deadline was set for progress on a deal, and the world’s two largest economies remain at odds over significant parts of an agreement.

The last major round of talks collapsed in May.

Financial markets, which have been rattled by the nearly year-long trade war, are likely to cheer the truce. Washington and Beijing have slapped tariffs on billions of dollars of each other’s imports, stoking fears of a wider global trade war. Those tariffs remain in place while negotiations resume.

“We’re right back on track,” Trump told reporters after an 80-minute meeting with Chinese President Xi Jinping at a summit of leaders of the Group of 20 (G20) major economies in Osaka, Japan.

“We’re holding back on tariffs and they’re going to buy farm products,” Trump said, without giving details about the purchases.

Trump tweeted hours later that the meeting with Xi went “far better than expected.”

“The quality of the transaction is far more important to me than speed,” he tweeted. “I am in no hurry, but things look very good!”

The U.S. president had threatened to slap new levies on roughly $300 billion of additional Chinese goods, including popular consumer products if the meeting in Japan proved unsuccessful. Such a move would have extended existing tariffs to almost all Chinese imports into the United States.

In a lengthy statement on the two-way talks, China’s foreign ministry quoted Xi as telling Trump he hoped the United States could treat Chinese companies fairly.

“China is sincere about continuing negotiations with the United States … but negotiations should be equal and show mutual respect,” the foreign ministry quoted Xi as saying.

Trump offered an olive branch to Xi on Huawei Technologies Co [HWT.UL], the world’s biggest telecom network gear maker. The Trump administration has said the Chinese firm is too close to China’s government and poses a national security risk, and has lobbied U.S. allies to keep Huawei out of next-generation 5G telecommunications infrastructure.

Trump’s Commerce Department has put Huawei on its “entity list,” effectively banning the company from buying parts and components from U.S. companies without U.S. government approval.

But Trump said on Saturday he did not think that was fair to U.S. suppliers, who were upset by the move. “We’re allowing that, because that wasn’t national security,” he said.

CHEERS FROM CHIP MAKERS

Trump said the U.S. Commerce Department would study in the next few days whether to take Huawei off the list of firms banned from buying components and technology from U.S. companies without government approval.

China welcomed the step.

“If the U.S. does what it says, then of course, we welcome it,” said Wang Xiaolong, the Chinese foreign ministry’s envoy for G20 affairs.

U.S. microchip makers also applauded the move.

“We are encouraged the talks are restarting and additional tariffs are on hold and we look forward to getting more detail on the president’s remarks on Huawei,” John Neuffer, president of the U.S. Semiconductor Association, said in a statement.

Republican U.S. Senator Marco Rubio, however, tweeted that any agreement to reverse the recent U.S. action against Huawei would be a “catastrophic mistake” and that legislation would be needed to put the restrictions back in place if that turned out to be the case.

Last month, Rubio and Democratic U.S. Senator Mark Warner urged Trump to not use Huawei as a bargaining chip for trade negotiations.

Huawei has come under mounting scrutiny for over a year, led by U.S. allegations that “back doors” in its routers, switches and other gear could allow China to spy on U.S. communications.

The company has denied its products pose a security threat. It declined to comment on the developments on Saturday.

The problems at Huawei have filtered across to the broader chip industry, with Broadcom Inc warning of a broad slowdown in demand and cutting its revenue forecast.

Trump said he and Xi did not discuss the extradition proceedings against Meng Wanzhou, Huawei’s chief financial officer, who was arrested in Canada in December on charges alleging she misled global banks about Huawei’s relationship with a company in Iran.

RELIEF AND SCEPTICISM

Scores of Asia specialists, including former U.S. diplomats and military officers, urged Trump to rethink policies that “treat China as an enemy,” warning that approach could hurt U.S. interests and the global economy, according to a draft open letter reviewed by Reuters on Saturday.

Investors, businesses and financial leaders have for months been warning that an intractable tit-for-tat tariff war between the United States and China could damage global supply chains and push the world economy over a cliff.

International Monetary Fund Managing Director Christine Lagarde on Saturday urged G20 policymakers to reduce tariffs and other obstacles to trade, warning that the global economy had hit a “rough patch” due to the trade conflict.

Although analysts cheered a resumption of talks between Washington and Beijing, some questioned whether the two sides would be able to build enough momentum to breach the divide and forge a lasting deal.

“Translating this truce into a durable easing of trade tensions is far from automatic … especially as what’s in play now extends well beyond economics to include delicate national security issues of both immediate- and longer-term nature,” said Mohamed El-Erian, chief economic adviser at Allianz.

The United States says China has been stealing American intellectual property for years, forces U.S. firms to share trade secrets as a condition for doing business in China, and subsidizes state-owned firms to dominate industries.

China has said the United States is making unreasonable demands and must also make concessions.

The negotiations hit an impasse in May after Washington accused Beijing of reneging on reform pledges made during months of talks. Trump raised tariffs to 25% from 10% on $200 billion of Chinese goods, and China retaliated by raising levies on a list of U.S. imports.

(Reporting by Roberta Rampton, Michael Martina and Chris Gallagher in Osaka; Additional reporting by Koh Gui Qing in New York, Ben Blanchard in Beijing and Leika Kihara in Osaka and Jennifer Ablan in New York; Writing by Linda Sieg, Malcolm Foster, Jeff Mason and Paul Simao; Editing by Clarence Fernandez, Himani Sarkar)

U.S. aims to restart China trade talks, will not accept conditions on tariff use

By Jeff Mason

WASHINGTON (Reuters) – The United States hopes to re-launch trade talks with China after President Donald Trump and President Xi Jinping meet in Japan on Saturday, but Washington will not accept any conditions around the U.S. use of tariffs in the dispute, a senior administration official said on Tuesday.

Trump has threatened to impose tariffs on another $325 billion of goods, covering nearly all the remaining Chinese imports into the United States – including consumer products such as cellphones, computers and clothing – if the meeting with Xi produces no progress in resolving a host of U.S. complaints around the way China does business.

The two sides could agree not to impose new tariffs as a goodwill gesture to get negotiations going, the official said, but he said it was unclear if that would happen.

The United States was not willing to come to the Xi meeting with concessions, said the official, who spoke on the condition of anonymity. Washington wants Beijing to come back the table with the promises it withdrew before talks broke down, he said.

China has shown no softening in its position and said on Monday that both sides should make compromises in the trade talks and that a trade deal has to be beneficial for both countries.

The back-and-forth set up what could prove to be a tricky meeting between Trump and Xi at the Group of 20 summit meeting in Osaka. The session will be the first time they have met since trade talks between the world’s two largest economies broke down in May, when the United States accused China of reneging on reform pledges it made.

Chinese Vice Premier Liu He, who has led trade talks for Beijing, held a phone conversation with his counterparts, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin, on Monday, according to China’s Ministry of Commerce. The three men are helping to pave the way for talks between the leaders later this week.

Expectations for that meeting so far appear to be low. The best-case scenario would be a resumption of official talks, which could ease fears in financial markets that the already long trade dispute might continue indefinitely. The fears have pummeled global markets and hurt the world economy.

Trump advisers have said no trade deal is expected at the meeting but they hope to create a path forward for talks. Once negotiations resume, they could take months or even years to complete, the senior Trump administration official said, with some parts agreed early and others needing more time.

A resumption of negotiations could put that threat of further tariffs on hold, at least for now.

But if Trump sees no progress and decides to raise tariffs, the relationship between the world’s two largest economies would deteriorate further.

“I think if they go with the tariffs, the trade talks are dead. Period,” said one person familiar with the talks.

The United States has made clear it wants China to go back to the position it held in a draft trade agreement that was nearly completed before Beijing balked at some of its terms, particularly requirements to change its laws on key issues.

Beijing wants the United States to lift tariffs, while Washington wants China to change a series of practices including on intellectual property and requirements that U.S. companies share their technology with Chinese companies in order to do business there.

As part of the trade war, Washington has already imposed 25% tariffs on $250 billion of Chinese goods, ranging from semi-conductors to furniture, that are imported to the United States.

PRESSURE BUILDING

The president has spoken optimistically about the chances of a deal.

The administration official said rounds of meetings between top trade officials from both countries likely would begin again after the G20 summit. He noted that although the vice premier still led China’s trade delegation, new names had been added to the list who could be hard-liners.

The official said Trump and Xi were unlikely to get into the fine details of the draft trade pact, although the case of Chinese tech giant Huawei Technologies Co may come up during talks.

Pressure on Huawei, which the U.S. government has labeled a security threat, has increased in recent days.

About a dozen rural U.S. telecom carriers that depend on Huawei for network gear are in discussions with its biggest rivals, Ericsson and Nokia, to replace their Chinese equipment, sources familiar with the matter said.

And the U.S.-based research arm of Huawei, Futurewei Technologies Inc, has moved to separate its operations from its corporate parent since the U.S government in May put Huawei on a trade blacklist, according to two people familiar with the matter.

Trump has indicated a willingness to include the Huawei issue in a trade deal, despite the national security implications cited by his advisers about the company. Meanwhile, U.S. parcel delivery firm FedEx Corp on Monday sued the U.S. government, saying it should not be held liable if it inadvertently shipped products that violated a Trump administration ban on exports to some Chinese companies.

The move came after FedEx reignited Chinese ire over its business practices when a package containing a Huawei phone sent to the United States was returned last week to its sender in Britain, in what FedEx said was an “operational error.”

(Reporting by Jeff Mason; additional reporting by Alexandra Alper, Jane Lanhee Lee, Tarmo Vikri, Andrew Galbraith and Angela Moon; editing by Simon Webb and Cynthia Osterman)

S&P 500 hits all-time high on trade optimism

FILE PHOTO: Traders work on the main trading floor after the opening bell at New York Stock Exchange (NYSE) in New York, U.S. June 20, 2019. REUTERS/Brendan McDermid/File Photo

By Amy Caren Daniel and Shreyashi Sanyal

(Reuters) – The S&P 500 touched a record high for the second straight session on Friday as hopes of trade talks between Washington and Beijing were lifted by U.S. Vice President Mike Pence’s decision to defer a planned speech on China policy.

The decision was taken amid “positive signs” that trade talks with China could be back on track, the Wall Street Journal reported, citing a senior administration official.

The benchmark S&P 500 index hit an intraday high of 2,964.15 on Friday, but retreated into a tight range as rising tensions between the United States and Iran kept investors on edge.

The United States and China have said they would restart their trade talks after a lull at the Group of 20 summit in Japan next week.

“Investors are cautiously optimistic about the G20 summit. If they make progress then markets will celebrate that,” said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.

Stocks are now set to log their third straight week of gains, after posting their worst monthly performance this year in May on fears the prolonged trade war would hit global economic growth.

U.S. President Donald Trump said on Friday he aborted a military strike on Iran in response to Teheran downing a U.S. drone, but the possibility of a U.S. retaliation pushed crude prices higher and helped lift the energy sector by 0.49%. [O/R]

Traders also pointed to higher volatility during Friday’s session on account of “quadruple witching,” as investors unwind interests in futures and options contracts prior to expiration.

At 13:09 p.m. ET, the Dow Jones Industrial Average was up 45.72 points, or 0.17%, at 26,798.89 and the S&P 500 was down 0.53 points, or 0.02%, at 2,953.65.

The Nasdaq Composite was down 7.13 points, or 0.09%, at 8,044.21.

The tech-heavy index was weighed down by a 2.02% fall in PayPal Holdings Inc after the digital payments company said its chief operating officer Bill Ready would step down.

CarMax Inc rose as much as 6% to a record high after the used-vehicles retailer posted quarterly results above analysts’ expectations.

Carnival Corp fell for the second day, down 4.53%, and among the biggest decliners. Several brokerages trimmed their price targets after the cruise operator cut its 2019 profit forecast.

Declining issues outnumbered advancers for a 1.47-to-1 ratio on the NYSE and for a 1.71-to-1 ratio on the Nasdaq.

The S&P index recorded 33 new 52-week highs and two new lows, while the Nasdaq recorded 42 new highs and 49 new lows.

(Reporting by Amy Caren Daniel and Shreyashi Sanyal in Bengaluru; Editing by Sriraj Kalluvila)

U.S., China bicker over ‘extravagant expectations’ on trade deal

A surveillance camera is seen next to containers at a logistics center near Tianjin Port, in northern China, May 16, 2019. REUTERS/Jason Lee

By Ben Blanchard and David Lawder

BEIJING/WASHINGTON (Reuters) – China accused the United States on Monday of harboring “extravagant expectations” for a trade deal, underlining the gulf between the two sides as U.S. action against China’s technology giant Huawei began hitting the global tech sector.

Adding to bilateral tension, the U.S. military said one of its warships sailed near the disputed Scarborough Shoal claimed by China in the South China Sea on Sunday, the latest in a series of “freedom of navigation operations” to anger Beijing.

Alphabet Inc’s Google has also suspended business with China’s Huawei Technologies Co Ltd that requires the transfer of hardware, software and technical services, except those publicly available via open source licensing, a source familiar with the matter told Reuters on Sunday, in a blow to the company that the U.S. government has sought to blacklist around the world.

Shares in European chipmakers Infineon Technologies, AMS and STMicroelectronics fell sharply on Monday amid worries the Huawei suppliers may suspend shipments to the Chinese firm due to the U.S. blacklisting of it last week.

The Trump administration’s addition of Huawei to a trade blacklist on Thursday immediately enacted restrictions that will make it extremely difficult for it to do business with U.S. counterparts.

In an interview with Fox News Channel recorded last week and aired on Sunday night, Trump said the United States and China “had a very strong deal, we had a good deal, and they changed it. And I said ‘that’s OK, we’re going to tariff their products’.”

In Beijing, Chinese Foreign Ministry spokesman Lu Kang said he didn’t know what Trump was talking about.

“We don’t know what this agreement is the United States is talking about. Perhaps the United States has an agreement they all along had extravagant expectations for, but it’s certainly not a so-called agreement that China agreed to,” he told a daily news briefing.

The reason the last round of China-U.S. talks did not reach an agreement is because the United States tried “to achieve unreasonable interests through extreme pressure”, Lu said.”From the start, this wouldn’t work.”

China went into the last round of talks with a sincere and constructive attitude, he said.

“I would like to reiterate once again that China-U.S. economic and trade consultation can only follow the correct track of mutual respect, equality and mutual benefit for there to be hope of success.”

No further trade talks between top Chinese and U.S. trade negotiators have been scheduled since the last round ended on May 10 – the same day Trump raised the tariff rate on $200 billion worth of Chinese products from 10 percent.

Trump took the step after the United States said China backtracked on commitments in a draft deal that had been largely agreed to.

STERNER TONE

Since then, China has struck a sterner tone, suggesting that a resumption of talks aimed at ending the 10-month trade war between the world’s two largest economies was unlikely to happen soon.

Beijing has said it will take “necessary measures” to defend the rights of Chinese companies but has not said whether or how it will retaliate over the U.S. actions against Huawei.

The editor of the Global Times, an influential tabloid run by the ruling Communist Party’s People’s Daily, tweeted on Monday that he had switched to a Huawei phone, although he said his decision did not mean that he thinks it is right to boycott Apple and said he was not throwing away his iPhone.

“While the U.S. spares no efforts to subdue Huawei, out of personal belief, I chose to support the well-respected company by using its product,” Hu Xijin tweeted.

Trump, who said the interview with Fox News host Steve Hilton had taken place two days after he raised the tariffs, said he would be happy to simply keep tariffs on Chinese products, but said that he believed that China would eventually make a deal with the United States “because they’re getting killed with the tariffs”.

But he said that he had told Chinese President Xi Jinping before the most recent rounds of talks that any deal could not be “50-50” between the two countries and had to be more in favor of the United States because of past trade practices by China.

(Reporting by David Lawder and Ben Blanchard; Writing by Tony Munroe; Editing by Richard Borsuk, Robert Birsel and Nick Macfie)