Just when we thought we were close to a deal, finally,
between the US and China over a trade deal,
the whole thing seems to be going haywire.
And that's before a Friday deadline when the Trump
administration has threatened to raise tariffs on China to 25
per cent. .
I'm Peter Spiegel, US managing editor of the Financial Times.
And I'm here with Demetri Sevastopulo, our Washington
bureau chief, in Washington.
Demetri, what has happened?
We're still trying to work out exactly what happened.
But what we know is Robert Lighthizer, the US trade
representative, and Steve Mnuchin, the Treasury
secretary, they went to Beijing last week.
And they had negotiations with Liu He, whose
the Chinese trade negotiator.
They came back.
They had conversations with Donald Trump at the weekend,
and the next thing we know, Donald Trump
has tweeted out that he's going to raise the tariffs from 10
per cent to 25 per cent on $200bn
worth of Chinese imports.
Now, what we were told yesterday by the American side
is that the deal looked like it was sliding into place,
but that over the last week or so the Chinese
started to backslide in terms of some of the things
that they had promised they would do.
Potentially involving...
the Americans want the Chinese to codify
in law whatever the deal says, whereas the Chinese
want to do it using regulation and other things where it might
be easier to backslide later.
Now, we haven't heard from the Chinese side
their view of what happened.
So we don't know yet.
Liu He is still scheduled to arrive in Washington this week.
So talks will continue.
But at this point, it's very hard
to see how any deal can be done before Friday.
So I think, if you're a betting person,
the tariffs are going to rise from 10 per cent to 25 per cent
this Friday, and then we will have entered
a new phase in this trade war.
Let me get back to that issue of the codification,
because this gets to what has been the biggest
issue in the last remaining weeks,
before the deal went sour, which is enforcement.
How do the Americans... how do they get convinced that
the Chinese will actually enforce any deal that is
in place?
I mean, how... do you think the Americans have an argument here
that there is a difficulty about enforcement if a deal is
actually struck?
Well, I think that's a concern not just
that the White House has.
That's a concern that the business community,
that pretty much everyone who's involved in China policy
in Washington, says... that this time,
whatever you agree with China, you have to try and do it
in a way that it is more enforceable.
And that it can be sustainable, and that the Chinese
can't row back their promises.
But I think, ultimately, both sides,
the Chinese and the Americans, still
have the option in the future, if they don't like what's
happening, to reimpose tariffs or to increase tariffs
even further.
So there are mechanisms where you can try and hold
the Chinese to their line, but it's not clear
how you can actually negotiate something
that is totally enforceable.
At some point, there has to be an element
of faith in negotiations.
And I think that's probably part of what's going on right now,
is both sides don't really trust each other on this issue.
And it's quite hard to get to an agreement.
There's also another thing which is the...
Robert Lighthizer, the trade representative,
he wants a comprehensive deal that has structural reform
in China, that China reforms its intellectual property
practises, that it stops forcing foreign...
particularly American companies...
to transfer their technology when they do certain kinds
of deals to Chinese companies, to their subsidiaries.
Donald Trump's main goal is to get a trade deal
and to try and reduce the trade deficit.
Now, we don't really know to what extent
Robert Lighthizer has encouraged the president
to really hold firm for a really comprehensive deal that
addresses all of the concerns of the American business
community.
And to what extent Donald Trump is saying, well, that's great,
but actually the most important thing for me
is a deal that addresses the deficit.
I think there's a little bit of a tug of war there, as well.
But clearly, Donald Trump, for now,
has decided that he can play hardball.
And these tweets have certainly sent a strong message
to Beijing.
Great.
Thank you, Demetri.
To follow Demetri's coverage and that of our Washington Bureau
as the trade talks begin on Thursday, please go to FT.com.
I'm Peter Spiegel for the Financial Times.