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Westlake Legal Group > Posts tagged "Lighthizer, Robert E"

Trump Cripples W.T.O. as Trade War Rages

Westlake Legal Group merlin_158492361_342fe44e-b0de-4db3-b9b1-e8ff8997a154-facebookJumbo Trump Cripples W.T.O. as Trade War Rages World Trade Organization United States Politics and Government United States International Relations Trump, Donald J Lighthizer, Robert E International Trade and World Market

WASHINGTON — The United States has spent two years chipping away at the World Trade Organization, criticizing it as unfair, starving it of personnel and disregarding its authority, as President Trump seeks to upend the global trade system.

This week, the Trump administration is expected to go one step further and effectively destroy the organization’s system for enforcing its rules — even as Mr. Trump’s widening trade war has thrown global commerce into disarray and another tariff increase on Chinese goods set for next weekend could send markets reeling.

Over the past two years, Washington has blocked the W.T.O. from appointing new members to a crucial panel that hears appeals in trade disputes. Only three members are left on the seven-member body, the minimum needed to hear a case, and two members’ terms expire on Tuesday. With the administration blocking any new replacements, there will be no official resolution for many international trade disputes.

The loss of the world’s primary trade referee could turn the typically deliberate process of resolving international disputes into a free-for-all, paving the way for an outbreak of tit-for-tat tariff wars.

It could also signal the end of the 24-year-old World Trade Organization itself, since the system for settling disputes has long been its most effective part.

“The W.T.O. is facing its deepest crisis since its creation,” Phil Hogan, the European trade commissioner, told members of the European Parliament this year. If the rules governing international trade can no longer be enforced, “we’d have the law of the jungle.”

Mr. Trump has already embraced that scenario, wielding America’s economic power to press for better trade terms. He has sidestepped W.T.O. rules by imposing metal tariffs on allies like Canada, Europe and Japan, and by adding punishing levies to Chinese goods, prompting appeals to the global body for relief.

The president and his top advisers have long viewed the W.T.O. as an impediment to Mr. Trump’s promise to put “America First.” They say the organization, which insists that all of its members receive equal treatment, has prevented the United States from protecting its workers and exerting its influence as the world’s most powerful economy. They have also criticized the W.T.O. for emboldening China — whose economy boomed after it became a member in 2001 — while doing little to curb Beijing’s unfair trade practices.

His advisers point to the W.T.O.’s inability to confront China as a reason for Mr. Trump’s trade war with Beijing.

“It’s absolutely critical that the United States has the ability to make its own trade policy,” said Stephen P. Vaughn, a partner at King & Spalding, who left a high-level post at the Office of the United States Trade Representative in May. “This ability becomes even more important given the challenges that we now face from China.”

The World Trade Organization was founded by American and European officials more than two decades ago as a way to open global markets, regulate commerce and promote peace and stability. One of its chief responsibilities was to write trade agreements among its members, and provide an orderly way to settle disputes.

But the W.T.O. almost immediately fell short when it came to writing trade pacts, as it found it nearly impossible to achieve consensus between disparate members like the United States, China, Afghanistan and India.

China’s entry into the organization — 18 years ago this week, on Dec. 11, 2001 — put further stress on the system. The addition of China’s more than one billion people to the global marketplace created a huge opportunity for companies, and a shock for workers in the United States and elsewhere who were forced to compete.

The W.T.O.’s rules were not written with an economy like China’s in mind, and critics say the organization has failed to adequately police Beijing for using a mix of private enterprise and state support to dominate global industries.

The Trump administration has criticized the body’s decision to allow China to claim a special status for developing countries given that it is now the world’s second largest economy. And it has condemned the W.T.O. for doing little to stop China from subsidizing its products — instead cracking down on American measures that are meant to block those cheap goods at the border.

While the W.T.O.’s ability to facilitate trade negotiations was largely paralyzed, its other arm, which settles trade disputes, has been much more active, reviewing dozens of cases a year.

Unlike other international organizations, whose rules have no way of being enforced, the W.T.O. may dole out punishments along with its verdicts. When one country is found to have suffered from another’s trade practices, the W.T.O. may allow the aggrieved country to recoup losses through retaliatory tariffs.

The United States has long won the majority of cases it brings to the W.T.O., though Mr. Trump incorrectly argues to the contrary. In October, the W.T.O. gave the United States permission to add tariffs on up to $7.5 billion of European products annually, after deciding that Europe had illegally subsidized its largest plane maker, Airbus.

“We never won with the W.T.O., or essentially never won,” Mr. Trump said Oct. 16 as he met with the Italian president. “And now we’re winning a lot. We’re winning a lot because they know if we’re not treated fairly, we’re leaving.”

But the United States has also lost cases, and the Trump administration is facing numerous challenges to the president’s aggressive use of tariffs to punish trading partners. Japan, Canada, China, the European Union and other governments are relying on the system to determine whether Mr. Trump’s tariffs on steel and aluminum violated global trade rules. However, many of those governments — including the European Union, Mexico and Canada — have not waited for a ruling before imposing retaliatory tariffs on American goods.

Supporters have credited the dispute settlement system with bringing the rule of law to an international trading system that formerly allowed strong countries to dominate weak ones.

But critics say the system exerts too much control, especially at the final stage when the seven-member appellate body makes a binding determination. American officials, including in the Obama administration, have accused the appellate body of judicial activism, saying it is overstepping its authority in creating new rules.

Robert Lighthizer, the United States trade representative, has argued that the body’s decisions constrain America’s ability to protect its workers and has insisted it be overhauled. In March, he told lawmakers on the Senate Finance Committee that the W.T.O. had migrated “from a negotiation forum to a litigation forum,” a transformation that had stifled new trade agreements and undermined some countries’ commitment to the organization.

Over the past two years, Mr. Lighthizer has overseen a targeted offensive against the appellate body, in what he says is a push for change. The United States has blocked the appointment of new appellate body members, which requires the consensus of all governments.

Officials in other countries share some of America’s concerns, particularly related to China, but they disagree with the Trump administration’s methods. They argue the United States and other countries should fix the problems and strengthen the global trading system, not abandon it.

The prospective weakening of global trade rules has worried smaller and poorer nations, who may find themselves at the mercy of the United States. It has also rankled the European Union, a strong believer in the multilateral system whose economy is heavily dependent on trade.

“They are not perfect, because they were born in a certain context, but they’ve served us well,” Cecilia Malmstrom, the former European Union trade commissioner, said of the global trading rules in an interview in September. “And if they’re not perfect, let’s work to improve them. Let’s not just abolish them.”

Trump administration officials say proposals to overhaul the W.T.O. have fallen short of what is needed. Dennis Shea, the American representative to the World Trade Organization, said last week that the United States had engaged constructively, but had “have yet to see the same level of engagement” from other countries.

W.T.O. members have been discussing ways to deal with the appellate body’s disappearance, like setting up their own informal appeal process, regardless of the verdict. Many are hopeful that the body can be restored once the Trump administration leaves office, whether that is in 2021 or 2025.

Roberto Azevêdo, the W.T.O. director-general, said last week that the suspension of appeals was a serious challenge but that it did “not mean the end of the multilateral trading system.”

But Ujal Singh Bhatia, one of the appellate body members whose term ends Tuesday, said that by making the dispute settlement system potentially non-functional, the United States’ moves had cast doubts on the effectiveness of the organization over all.

“Why would people come to the W.T.O. to negotiate rules if they are not sure the rules can be enforced?” Mr. Bhatia asked.

Jack Ewing contributed reporting from Frankfurt.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Impeachment Fight May Help a New NAFTA Deal

Westlake Legal Group merlin_149149407_0a6f61d5-8746-484c-9b23-07cd02828074-facebookJumbo Impeachment Fight May Help a New NAFTA Deal United States Politics and Government United States Chamber of Commerce Trump, Donald J Pelosi, Nancy North American Free Trade Agreement Mexico Lighthizer, Robert E Labor and Jobs International Trade and World Market impeachment House Committee on Ways and Means Canada

WASHINGTON — The escalating impeachment drama between Congress and the White House that has all but doomed hopes of most legislative progress this fall has instead enhanced the prospects for approval, within weeks, of one major initiative: a sweeping new trade agreement among the United States, Canada and Mexico.

Top lawmakers in both parties and others closely following the talks said that substantial progress had been made in resolving the sticking points, and that a decisive House vote on the accord to replace the North American Free Trade Agreement could occur before Congress departed for Thanksgiving.

The deal may be a rare bright spot in an otherwise dysfunctional dynamic that has taken hold in the capital, and it owes its progress to a coincidence of timing, productive negotiations that have unfolded behind closed doors for months and political necessity for two parties that each has distinct reasons to hope it succeeds.

“We are on a path to yes,” Speaker Nancy Pelosi told reporters last week in one of the strongest signals yet that she would put the full weight of her leadership behind passage of the agreement, the United States-Mexico-Canada Agreement.

Both parties have strong political incentives to approve the trade deal despite deep Democratic skepticism over such pacts after American jobs flowed into Mexico after the ratification of NAFTA in 1993.

For President Trump and Republicans, the agreement is a major priority that could bolster American businesses and help struggling farmers, while showing voters that they have been good stewards of the economy. For Democrats, the accord is a way to give lawmakers from swing districts a broadly popular achievement to show constituents, and a way to counter criticism that they have accomplished little during their time in Washington, which has more often consisted of passing legislation that dies in the Republican-controlled Senate.

That has become even more important now that House Democrats are engaged in an impeachment inquiry that could lead to the president’s ouster. Democrats who represent Republican-leaning districts are facing a potential backlash from Republican and independent voters angry over the Democrats’ emphasis on impeachment, and they are looking for ways to show that they can still produce policies that benefit Americans.

“We are going to demonstrate that simultaneously you can govern,” said Representative Richard E. Neal, the Massachusetts Democrat who leads the Ways and Means Committee. Mr. Neal is leading a delegation to Mexico for a meeting on Tuesday with President Andrés Manuel López Obrador to seek final assurances over aspects of the trade agreement.

Top Democrats also see the agreement as a vehicle to achieve some major progressive goals that would otherwise be impossible to extract from a Republican administration. Republicans are considering potential sweeteners for Democrats, including a plan to shore up pensions that has been sought by Mr. Neal and labor unions.

House Democrats and Robert Lighthizer, the United States trade representative, have been exchanging proposals and counterproposals for weeks, trying to satisfy demands for labor and environmental guarantees. Both sides say the confidential talks have produced results that are leading to increasing confidence that Ms. Pelosi will put the measure on the floor relatively soon.

“It has been a patient give-and-go, and I think we have moved the ball toward the goal,” Mr. Neal said.

Even Democrats skeptical of a trade deal based on their previous experience said the talks with Mr. Lighthizer, who has built credibility with the lawmakers, had been substantive and helpful.

“We have been having conversations for I think over a year, and the Democrats made very serious, thoughtful proposals around issues that we have been consistent on over the years,” said Representative Rosa DeLauro of Connecticut, a member of a working group appointed by the speaker to work out Democratic concerns over the agreement.

But Ms. DeLauro, who opposed NAFTA and was an early critic of the failed Trans-Pacific Partnership agreement, was not quite ready to sign off.

“We are making headway,” she said. “Our view is that when it is right, we will go. We are not there yet.”

There are substantial issues that could still hold up a final agreement. It is not clear, for instance, how negotiators plan to address Democrats’ objections to a provision that would extend protections to pharmaceutical companies for new products. Democrats argue that such measures could hamper future efforts to enact legislation to lower the cost of prescription drugs.

Democrats say that their main fear is that Mexico will not enforce the provisions of the trade deal in areas such as minimum wage requirements and environmental standards, and that the United States will not be allowed to make inspections to determine whether the agreement is being followed. They were alarmed by news reports of labor department budget cuts in Mexico, a fear the Mexican government has raced to alleviate.

Republicans lobbying for the agreement argue that supporting it should be an easy choice for Democrats who have long criticized NAFTA, since the new version amounts to an update with several far more progressive elements than the existing agreement, such as new minimum pay levels.

Senator Rob Portman, Republican of Ohio and a chief trade negotiator for President George W. Bush, is a leading proponent of the agreement and has been trying to sell Democrats on its merits.

“If you vote no on this, that means you are saying, ‘Let’s go with NAFTA,’ and politically for most Democrats, NAFTA is a four-letter word,” Mr. Portman said in an interview. “I just think logic prevails in the end.”

More than that, some Democrats believe the trade agreement is their best prospect for achieving some bipartisan success in such a highly polarized environment.

“People understand and appreciate that we’re trying to get to yes, and we’re trying to get it right,” Representative Lizzie Fletcher said.

Ms. Fletcher, who represents the Houston area, noted in an interview the number of trade relationships between her district and both countries in the new trade agreement, and said sealing the deal would show that the gridlocked Congress could achieve some consensus.

“People really want to know about how we’re working together and where there’s bipartisan agreement,” she added. “They want to know that we’re trying to solve real problems.”

Representative Abigail Spanberger, Democrat of Virginia, said the trade deal was a rare consequential measure that could pass the House without falling victim to Republican resistance in the other chamber or in the White House.

“The notable thing about U.S.M.C.A. is that it’s also a priority for the Senate and for the president,” Ms. Spanberger said of the new trade deal. “That hasn’t been the case for some of our most impactful legislation.”

To move the agreement forward, Democrats will need to conclude that it is beneficial enough to them that they are willing to share credit with Mr. Trump over an accomplishment that he will undoubtedly herald in his re-election campaign. Ms. Pelosi, who voted for NAFTA in the House, has told colleagues that she wants to get the new trade agreement approved, and has made clear that she hopes Democrats can separate the impeachment fight and the trade deal.

“They have nothing to do with each other,” Ms. Pelosi said. She added that if the president did not work with Democrats because they questioned his conduct, “then the ball is in his court.”

Despite the priority the Trump administration and congressional Republicans have put on the trade agreement, some concern has arisen in recent days that Mr. Trump, furious over the impeachment showdown, would pull back on the agreement and try to blame Democrats for its collapse, saying they could not get it done because of a single-minded focus on impeachment.

“The Do Nothing Democrats don’t have time to get it done!” Mr. Trump tweeted Thursday about the trade deal.

Ultimately, backers of the agreement believe, the White House will embrace congressional approval of the long-sought agreement as a major victory for the president.

“We are pretty bullish,” said Neil Bradley, executive vice president at the U.S. Chamber of Commerce. “The speaker is saying all the right things, and they are actually making progress in the negotiations.”

“At the end of the day,” he said, “you want to show that impeachment is not the only thing you are focused on.”

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U.S. and China Agree to Resume Trade Talks, Sending Markets Higher

Westlake Legal Group 04chinatrade-facebookJumbo U.S. and China Agree to Resume Trade Talks, Sending Markets Higher United States International Relations United States Trump, Donald J Politics and Government Mnuchin, Steven T Liu He (1952- ) Lighthizer, Robert E International Trade and World Market Economic Conditions and Trends Customs (Tariff) China

SHANGHAI — The United States and China will hold trade talks in Washington early next month, officials from both countries said on Thursday, but new tariffs will make it difficult to find a way to end their economic clash.

Liu He, a top Chinese economic official and Beijing’s top trade negotiator, will travel to Washington in early October, state media said. Mr. Liu spoke on Thursday morning with Robert E. Lighthizer, the United States trade representative, and Steven Mnuchin, the United States Treasury secretary. Mr. Lighthizer’s office said that deputy-level meetings would take place ahead of the talks.

Stocks around the world rose following the news that talks would resume. Early trading on Wall Street was also up.

If held as scheduled, the talks would take place after new American tariffs kick in, which could make it difficult for the two sides to reach a deal. President Trump has said he would raise tariffs to 30 percent from the current 25 percent on $250 billion in Chinese goods. Those tariffs cover everything from cars to aircraft parts.

On Sunday, Washington began charging a 15 percent tax on more than $100 billion worth of Chinese imports. Beijing retaliated with its own increased tariffs. Both countries plan to impose still more tariffs in December, barring a breakthrough in talks.

Already, pessimism had been growing on both sides of the Pacific Ocean about the possibility of a trade deal before the United States presidential elections next year. The mounting tariffs have rattled global markets and set off fears over world economic growth.

On Thursday, the S&P 500 jumped following news of the talks.

The rise reflects a sense of relief among investors that the two sides, which have recently been seen as far apart in negotiations, may once again seek to find a way to de-escalate a conflict that has raised global economic concerns and has injected uncertainty into the markets.

More than half of respondents to Bank of America’s monthly survey of global fund managers in August cited a worsening trade war as the top “tail risk” — a remote, but potentially deeply destabilizing threat — facing markets.

Over the last year, the potential fallout of the trade battle surpassed previous worries that troubled these professional investors, such as the chance that the Federal Reserve could tighten interest rates too far or a sharp slowdown in Chinese growth could stifle global growth.

At times this year, the stock market has suffered bouts of extreme volatility, first in May and again last month, when previous cease-fires in the battle between the United States and China broke down.

Data on mutual funds and E.T.F.s has shown money consistently flowing out of the stock market and into the bond market, often considered a safe haven for investors, which is also enjoying a strong year.

Businesses in both the United States and China have begun to express concern about a trade war that has dragged on for more than a year. American manufacturing activity contracted for the first time in three years because of slowing export orders amid the trade dispute, data showed on Wednesday.

Chinese factory activity, meanwhile, contracted for three months this summer before ticking back up slightly in data released this week. Its manufacturing sector has suffered layoffs and factory shutdowns from the trade war and as its economy grows at its slowest pace in three decades.

“When I speak to C.E.O.s of leading Chinese and global companies, everyone is fretting about what the latest escalations mean for their businesses in the short term, and more worrisome, for their long-term strategy and investment plans,” said Fred Hu, founder of the investment firm Primavera Capital Group and former head of Goldman Sachs’s greater China business.

The two sides show little sign of backing down, however. Mr. Trump has gambled that China’s softening economy will put pressure on Beijing’s leaders to back down. Speaking with reporters on Wednesday, Mr. Trump cited the country’s slowdown, which he called, inaccurately, “the worst year they’ve had in 57 years.”

“And they want to make a deal,” Mr. Trump said. “We’ll see what happens.”

For their part, China’s leaders believe their own efforts to quell China’s dependence on debt are mostly responsible for the slowdown, and that they could reverse course if needed to bolster growth.

Next month’s talks would be the 13th time that senior-level trade negotiators have met. American negotiators traveled to Shanghai in July to meet briefly with their Chinese counterparts and left with an agreement to meet again in Washington on Sept. 1.

But the plans were disrupted when, one day after negotiators returned home, Mr. Trump said the United States would impose a 10 percent tariff on $300 billion worth of Chinese goods on Sept. 1, once again escalating trade tensions.

State controlled media has contended that the trade war is hurting American consumers more than Chinese companies and citizens. “The White House lifted a rock, which fell on the feet of the America public,” the Global Times, a nationalistic tabloid, wrote in a Sept. 1 editorial after the latest round of tariffs set in.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

U.S.-China Trade Talks to Resume, but New Tariffs Could Complicate Them

Westlake Legal Group 04chinatrade-facebookJumbo U.S.-China Trade Talks to Resume, but New Tariffs Could Complicate Them United States International Relations United States Trump, Donald J Politics and Government Mnuchin, Steven T Liu He (1952- ) Lighthizer, Robert E International Trade and World Market Economic Conditions and Trends Customs (Tariff) China

SHANGHAI — The United States and China will hold trade talks in Washington early next month, officials from both countries said on Thursday, but new tariffs will make it difficult to find a way to end their economic clash.

Liu He, a top Chinese economic official and Beijing’s top trade negotiator, will travel to Washington in early October, state media said. Mr. Liu spoke on Thursday morning with Robert E. Lighthizer, the United States trade representative, and Steven Mnuchin, the United States Treasury secretary. Mr. Lighthizer’s office said that deputy-level meetings would take place ahead of the talks.

If held as scheduled, the talks would take place after new American tariffs kick in, which could make it difficult for the two sides to reach a deal. President Trump has said he would raise tariffs to 30 percent from the current 25 percent on $250 billion in Chinese goods. Those tariffs cover everything from cars to aircraft parts.

On Sunday, Washington began charging a 15 percent tax on more than $100 billion worth of Chinese imports. Beijing retaliated with its own increased tariffs. Both countries plan to impose still more tariffs in December, barring a breakthrough in talks.

Already, pessimism had been growing on both sides of the Pacific Ocean about the possibility of a trade deal before the United States presidential elections next year. The mounting tariffs have rattled global markets and set off fears over world economic growth.

Businesses in both the United States and China have begun to express concern about a trade war that has dragged on for more than a year. American manufacturing activity contracted for the first time in three years because of slowing export orders amid the trade dispute, data showed on Wednesday.

Chinese factory activity, meanwhile, contracted for three months this summer before ticking back up slightly in data released this week. Its manufacturing sector has suffered layoffs and factory shutdowns from the trade war and as its economy grows at its slowest pace in three decades.

“When I speak to C.E.O.s of leading Chinese and global companies, everyone is fretting about what the latest escalations mean for their businesses in the short term, and more worrisome, for their long-term strategy and investment plans,” said Fred Hu, founder of the investment firm Primavera Capital Group and former head of Goldman Sachs’s greater China business.

The two sides show little sign of backing down, however. Mr. Trump has gambled that China’s softening economy will put pressure on Beijing’s leaders to back down. Speaking with reporters on Wednesday, Mr. Trump cited the country’s slowdown, which he called, inaccurately, “the worst year they’ve had in 57 years.”

“And they want to make a deal,” Mr. Trump said. “We’ll see what happens.”

For their part, China’s leaders believe their own efforts to quell China’s dependence on debt are mostly responsible for the slowdown, and that they could reverse course if needed to bolster growth.

Next month’s talks would be the 13th time that senior-level trade negotiators have met. American negotiators traveled to Shanghai in July to meet briefly with their Chinese counterparts and left with an agreement to meet again in Washington on Sept. 1.

But the plans were disrupted when, one day after negotiators returned home, Mr. Trump said the United States would impose a 10 percent tariff on $300 billion worth of Chinese goods on Sept. 1, once again escalating trade tensions.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

U.S.-China Trade Talks to Resume, but New Tariffs Could Complicate Them

Westlake Legal Group 04chinatrade-facebookJumbo U.S.-China Trade Talks to Resume, but New Tariffs Could Complicate Them United States International Relations United States Trump, Donald J Politics and Government Mnuchin, Steven T Liu He (1952- ) Lighthizer, Robert E International Trade and World Market Economic Conditions and Trends Customs (Tariff) China

SHANGHAI — The United States and China will hold trade talks in Washington early next month, officials from both countries said on Thursday, but new tariffs will make it difficult to find a way to end their economic clash.

Liu He, a top Chinese economic official and Beijing’s top trade negotiator, will travel to Washington in early October, state media said. Mr. Liu spoke on Thursday morning with Robert E. Lighthizer, the United States trade representative, and Steven Mnuchin, the United States Treasury secretary. Mr. Lighthizer’s office said that deputy-level meetings would take place ahead of the talks.

If held as scheduled, the talks would take place after new American tariffs kick in, which could make it difficult for the two sides to reach a deal. President Trump has said he would raise tariffs to 30 percent from the current 25 percent on $250 billion in Chinese goods. Those tariffs cover everything from cars to aircraft parts.

On Sunday, Washington began charging a 15 percent tax on more than $100 billion worth of Chinese imports. Beijing retaliated with its own increased tariffs. Both countries plan to impose still more tariffs in December, barring a breakthrough in talks.

Already, pessimism had been growing on both sides of the Pacific Ocean about the possibility of a trade deal before the United States presidential elections next year. The mounting tariffs have rattled global markets and set off fears over world economic growth.

Businesses in both the United States and China have begun to express concern about a trade war that has dragged on for more than a year. American manufacturing activity contracted for the first time in three years because of slowing export orders amid the trade dispute, data showed on Wednesday.

Chinese factory activity, meanwhile, contracted for three months this summer before ticking back up slightly in data released this week. Its manufacturing sector has suffered layoffs and factory shutdowns from the trade war and as its economy grows at its slowest pace in three decades.

“When I speak to C.E.O.s of leading Chinese and global companies, everyone is fretting about what the latest escalations mean for their businesses in the short term, and more worrisome, for their long-term strategy and investment plans,” said Fred Hu, founder of the investment firm Primavera Capital Group and former head of Goldman Sachs’s greater China business.

The two sides show little sign of backing down, however. Mr. Trump has gambled that China’s softening economy will put pressure on Beijing’s leaders to back down. Speaking with reporters on Wednesday, Mr. Trump cited the country’s slowdown, which he called, inaccurately, “the worst year they’ve had in 57 years.”

“And they want to make a deal,” Mr. Trump said. “We’ll see what happens.”

For their part, China’s leaders believe their own efforts to quell China’s dependence on debt are mostly responsible for the slowdown, and that they could reverse course if needed to bolster growth.

Next month’s talks would be the 13th time that senior-level trade negotiators have met. American negotiators traveled to Shanghai in July to meet briefly with their Chinese counterparts and left with an agreement to meet again in Washington on Sept. 1.

But the plans were disrupted when, one day after negotiators returned home, Mr. Trump said the United States would impose a 10 percent tariff on $300 billion worth of Chinese goods on Sept. 1, once again escalating trade tensions.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

U.S.-China Trade Talks to Resume, but New Tariffs Could Complicate Them

Westlake Legal Group 04chinatrade-facebookJumbo U.S.-China Trade Talks to Resume, but New Tariffs Could Complicate Them United States International Relations United States Trump, Donald J Politics and Government Mnuchin, Steven T Liu He (1952- ) Lighthizer, Robert E International Trade and World Market Economic Conditions and Trends Customs (Tariff) China

SHANGHAI — The United States and China will hold trade talks in Washington early next month, officials from both countries said on Thursday, but new tariffs will make it difficult to find a way to end their economic clash.

Liu He, a top Chinese economic official and Beijing’s top trade negotiator, will travel to Washington in early October, state media said. Mr. Liu spoke on Thursday morning with Robert E. Lighthizer, the United States trade representative, and Steven Mnuchin, the United States Treasury secretary. Mr. Lighthizer’s office said that deputy-level meetings would take place ahead of the talks.

If held as scheduled, the talks would take place after new American tariffs kick in, which could make it difficult for the two sides to reach a deal. President Trump has said he would raise tariffs to 30 percent from the current 25 percent on $250 billion in Chinese goods. Those tariffs cover everything from cars to aircraft parts.

On Sunday, Washington began charging a 15 percent tax on more than $100 billion worth of Chinese imports. Beijing retaliated with its own increased tariffs. Both countries plan to impose still more tariffs in December, barring a breakthrough in talks.

Already, pessimism had been growing on both sides of the Pacific Ocean about the possibility of a trade deal before the United States presidential elections next year. The mounting tariffs have rattled global markets and set off fears over world economic growth.

Businesses in both the United States and China have begun to express concern about a trade war that has dragged on for more than a year. American manufacturing activity contracted for the first time in three years because of slowing export orders amid the trade dispute, data showed on Wednesday.

Chinese factory activity, meanwhile, contracted for three months this summer before ticking back up slightly in data released this week. Its manufacturing sector has suffered layoffs and factory shutdowns from the trade war and as its economy grows at its slowest pace in three decades.

“When I speak to C.E.O.s of leading Chinese and global companies, everyone is fretting about what the latest escalations mean for their businesses in the short term, and more worrisome, for their long-term strategy and investment plans,” said Fred Hu, founder of the investment firm Primavera Capital Group and former head of Goldman Sachs’s greater China business.

The two sides show little sign of backing down, however. Mr. Trump has gambled that China’s softening economy will put pressure on Beijing’s leaders to back down. Speaking with reporters on Wednesday, Mr. Trump cited the country’s slowdown, which he called, inaccurately, “the worst year they’ve had in 57 years.”

“And they want to make a deal,” Mr. Trump said. “We’ll see what happens.”

For their part, China’s leaders believe their own efforts to quell China’s dependence on debt are mostly responsible for the slowdown, and that they could reverse course if needed to bolster growth.

Next month’s talks would be the 13th time that senior-level trade negotiators have met. American negotiators traveled to Shanghai in July to meet briefly with their Chinese counterparts and left with an agreement to meet again in Washington on Sept. 1.

But the plans were disrupted when, one day after negotiators returned home, Mr. Trump said the United States would impose a 10 percent tariff on $300 billion worth of Chinese goods on Sept. 1, once again escalating trade tensions.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trump Can Battle China or Expand the Economy. He Can’t Do Both.

LONDON — As President Trump intermittently escalates and moderates his trade war with China, his conflicting signals reflect a reality that limits his actions: He can try to sever the deeply intertwined American commercial relationship with China, or he can prod economic growth to assuage the fears of investors around the planet.

But he cannot do both at the same time.

Mr. Trump need not rely on the testimonials of economists to deduce this. He can disregard the admonitions of news outlets he derides as fake news. He can simply consult the one source whose verdicts he tends to celebrate: the stock market.

Among those who control money, portents of further trade hostilities between the United States and China, the two largest economies on earth, have proved an impetus to sell with abandon while amplifying talk of recession. Intimations of a deal avoiding further animosity reverberate as a clarion call to buy, sending share prices higher while easing worries about a potential global economic downturn.

Mr. Trump often appears caught between competing impulses that pull markets — and his China policy — in opposite directions.

Talk of a trade deal with China makes for happy stock markets and retirement account statements that Americans open up to learn that they are, also happily, richer. For a president seeking re-election next year, this option holds appeal.

Thunderous threats of fresh tariffs on Chinese goods and the forging of a new order in which American industry forsakes China may damage share prices and shrink economic growth prospects. But it brings plaudits from Mr. Trump’s most ardent political base — nationalists who portray the trade war as a tough but necessary piece of business, the sort of action evaded by the cowards who resided at the White House before.

The latest evidence for this state of affairs came in recent days, as Mr. Trump angrily reacted to China’s announcement of retaliatory tariffs of 10 percent on some $75 billion worth of American exports.

On Friday, the president unleashed furious tweets threatening China with pain. He vowed to raise tariffs on $550 billion of Chinese goods. He declared that China’s president, Xi Jinping, whom he had previously called a “good man,” was an “enemy.” And he commanded American companies to abandon China and start making their products in the United States.

ImageWestlake Legal Group merlin_151214007_f44ac43b-806f-4f47-8485-fb3310adfbdd-articleLarge Trump Can Battle China or Expand the Economy. He Can’t Do Both. United States International Relations United States Economy Trump, Donald J Mnuchin, Steven T Lighthizer, Robert E International Trade and World Market China Bolton, John R

The end of a shift at a Ford factory in Chongqing, China. Last week, Mr. Trump ordered American companies to leave China.CreditGilles Sabrié for The New York Times

That last bit was especially striking given that successive American administrations have criticized Chinese counterparts for using state-owned companies as tools of policy in contravention of market forces. Now, here was the president of the United States, traditional champion of swashbuckling capitalism, ordering American companies to heed his dictates.

In markets around the globe, investors reacted to these developments as powerful signals to yank their money to safety. They sold stocks and bought bonds. They dumped a vast assortment of currencies and purchased the American dollar, the ultimate haven in moments of worry.

They reacted, in short, as if much of the globe suddenly appeared riskier.

Signs of trouble had already been mounting. For better or worse, the United States and China have been fused for two decades, with their fortunes influencing economic conditions everywhere.

China has invested aggressively in manufacturing plants, ports and power systems to become the factory to the world. American consumers are the most significant drivers of economic growth on earth. Together, the United States and China are responsible for about 40 percent of the world’s economic output.

Any sign of a breakdown in this arrangement — the threat that China will be impeded in selling its goods, or that the American appetite is waning — spreads worry far and wide.

The trade war that has escalated over the last year has already produced distress. Germany, the largest economy in Europe, is teetering toward recession in large part because of weakening exports. As China’s economy slows in the face of American tariffs, Chinese factories have less need for goods made in Germany, from machinery to petrochemicals.

German weakness has contributed to a general sense of malaise in Europe, just as the Continent grapples with the prospect that Britain — also contracting — might crash out of the European Union without a deal governing future commercial relations.

Across Asia, the drop in trade has sown trouble, with Singapore and Hong Kong now declining and South Korea slowing. Even Vietnam — a country that has received fresh investment as multinational companies seek alternatives to making their wares in China — looks vulnerable if global trade over all continues to diminish.

The uncertainty of the trade war has caused companies like Gradall Industries, which makes industrial equipment in Ohio, to postpone investments.CreditRoss Mantle for The New York Times

“For the rest of the world, there are many other countries that are innocent bystanders that will actually suffer even more than the United States and China,” said Louis Kuijs, the Hong Kong-based head of Asia economics at Oxford Economics. “There is not going to be any de-escalation any time soon.”

The United States is still growing, with the unemployment rate lower than it had been in half a century. But companies are deferring investments as they puzzle over the impact of trade hostilities. How can executives proceed with expanding operations in Ohio or Michigan when they have no certainty over the tariffs that will apply to parts and electronics brought in from China? A slowdown in investment could eventually prompt households to curb their spending, bringing a recession.

If a continued trade war footing tanks stock markets, share prices could themselves become an affliction. As millions of Americans absorb the reality that their investments are worth less, they may question whether to buy that new home, take that trip or open that new business.

Long before Mr. Trump took office, American governments complained about China and its failed promises to open its market. China has lavished subsidies on state-owned companies. It turned itself into an export juggernaut while ignoring labor and environmental standards.

Beijing and Washington have argued over this state of affairs for decades, while American labor interests and industry groups have demanded redress.

But Mr. Trump has gone much further than his predecessors in his diagnosis. In his telling — at least, in his combative moments — China is a rogue operator that fleeces Americans. The solution is not another slow-moving case at the World Trade Organization, but a fundamental redrawing of commercial geography. American companies must vacate China, walking away from customers and supply chains. In his view, the American economy is supposed to “decouple” from China, as the think tank vernacular has it.

Mr. Trump’s tweet storm on Friday morning appeared to underscore that he was serious, that he was truly willing to see Americans accept the costs — plunging stock markets, weakening investment — for a wholly new sort of relationship with China as adversary.

Stock markets suffered a sell-off because a dissolution of American and Chinese commercial arrangements was certain to be disruptive. Companies with global operations would have to scramble to figure out where they would buy parts and raw materials. The potential outcomes were many, but none of them involved the world’s getting richer.

Commerzbank headquarters in Frankfurt. With exports to China weakening, Germany is at risk of a recession.CreditFelix Schmitt for The New York Times

Yet by Sunday morning, at the Group of 7 summit in France, Mr. Trump was expressing “second thoughts” about the new tariffs on Chinese goods. By Monday morning, he was calling Mr. Xi a “great leader” and reporting that China was interested in resuming trade talks. Stock markets were buoyant. At least for a few hours, the bewildering notion that the United States and China were dissolving ties could be forgotten.

But for how long? And what is the end game?

For as long as Mr. Trump has occupied the Oval Office, trade experts have parsed his often contradictory words and actions for clues to his real policy aims and beliefs. They have labored to divine what he values, and somehow separate it from what he may say as a negotiating ploy or as a diversion from scandal.

Most have come to conclude that his policy is perpetually flexible, depending on which advisers have his ear and on the tenor of television conversations about American economic growth prospects and — especially — the stock market.

His hard-line advisers — like the United States trade representative, Robert Lighthizer, and Mr. Trump’s chief trade adviser, Peter Navarro, author of a book called “Death by China” — urge him to untether the American economy from China.

The president’s national security adviser, John R. Bolton, portrays trade as but one element in which China poses grave peril to American interests. In this calculus, economic damage is the unavoidable cost of reclaiming American status as a superpower that dictates the terms of world engagement.

But Larry Kudlow, the former television host who leads Mr. Trump’s National Economic Council, and Treasury Secretary Steven Mnuchin tend to focus on areas of interest to investors, not least share prices. Conventional wisdom has it that Mr. Trump is channeling their influence when he talks up possible deals with China.

Mr. Trump is famously adept at maintaining positions that seem mutually exclusive. In recent weeks, he has touted the awesome strength of the American economy while excoriating the Federal Reserve chair for imperiling the economy by not aggressively lowering interest rates. He has flirted with tax breaks to juice the economy further.

But the trade war threatens to force Mr. Trump to choose between it and economic growth.

In Beijing and Washington alike, hard-liners have dug in, shrinking room for a compromise. In both capitals, a sense of permanent alteration has transpired, a deepening assumption that — whatever comes next — China and the United States will proceed with profound wariness.

For the global economy, that could entail grave uncertainties and perils.

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Trump Plans More Tariffs for China. You’ll Feel This Round.

Westlake Legal Group 02DC-CHINATARIFFS-01-facebookJumbo Trump Plans More Tariffs for China. You’ll Feel This Round. United States International Relations United States Economy Trump, Donald J Shoes and Boots Prices (Fares, Fees and Rates) Powell, Jerome H Office of the United States Trade Representative National Retail Federation Luxury Goods and Services Lighthizer, Robert E International Trade and World Market Inflation (Economics) Federal Reserve System Economic Conditions and Trends Customs (Tariff)

President Trump announced another wave of China tariffs this week, essentially saying he would impose a tax on nearly all $540 billion in Chinese goods that come into the United States in a year. And this batch could really bite.

The administration carefully tailored previous rounds of tariffs to pinch businesses in ways that most Americans might not notice. But the 10 percent levy on $300 billion of imports that Mr. Trump announced on Thursday, which would take effect Sept. 1, is expected to hit consumers where it hurts. From Apple’s iPhones to school supplies, a broad swath of everyday products are about to get more expensive.

The latest move is likely to prompt companies to submit exclusion requests to be spared from the tariffs, cause the Federal Reserve to rethink its plans for interest rates and inspire fresh retaliation from China that could compound Americans’ economic pain.

Here’s what to expect.

Until Sept. 1, the focus will be on the Office of the United States Trade Representative for a final list of the Chinese products subject to the new tariffs. The items will come from a 76-page list published in the Federal Register in May after Mr. Trump said that he wanted to have more potential tariffs in his quiver if the trade dispute dragged on.

Not every item on the May list will necessarily face tariffs. The trade representative’s office held a week of hearings about the proposed duties and has received comments from businesses around the country hoping for exemptions.

If the tariffs do take effect on Sept. 1, companies will have an opportunity to apply for exemptions. In previous instances, those seeking waivers had to explain why the tariffs would cause them “severe economic harm,” whether the product at issue or a comparable one was unavailable outside China and whether the item was “strategically important” to China’s industrial policy.

Earlier rounds of tariffs mostly focused on industrial goods, but the 10 percent levy announced Thursday is directed squarely at consumer items like clothes, toys and footwear.

That is bad news for, among others, shoemakers and the stores that sell their products, said Matt Priest, the chief executive of the Footwear Distributors and Retailers of America. Less than 1 percent of shoes are made domestically, and China is the source of 70 percent of the goods imported into the United States.

“We’re very concerned this will be a long-term cost baked into what consumers will pay,” Mr. Priest said, adding that he was not expecting exclusions to be made for footwear.

“Nearly every type of shoe is made in China, so there will be impact across the board,” he said. The only exceptions are some high-end leather shoes that are made in Europe.

With some consumer products, the supply comes almost entirely from China, said David French, senior vice president of government relations at the National Retail Federation. He cited umbrellas, electric blankets and toys.

“Trump is feeling very muscular right now,” Mr. French said. “But the next round of tariffs will hit the president’s base particularly hard. The people who voted for him in 2016 felt economically vulnerable. The tariffs will cause job losses and higher prices for everybody but especially his base.”

The most prominent American company bracing for the tariffs is Apple, which typically unveils new products every September.

In a letter in June, Apple urged Robert E. Lighthizer, Mr. Trump’s top trade adviser, not to proceed with any new tariffs. The company warned that such tariffs would hamper its global competitiveness and reduce its contribution to the United States economy. Apple also said that new tariffs would tilt the playing field in favor of its global rivals.

Thus far, Mr. Trump has shown little sympathy for Apple. Last month, after the company filed 15 tariff-exclusion requests, he said that they would be denied and that the company should make its products in the United States.

Should the new tariffs take effect on Sept. 1, they will hit Apple’s phones, watches, MacBooks, iMacs, iPads, AppleTV, keyboards and batteries. The company’s shares fell more than 2 percent on Thursday after Mr. Trump said the new tariffs were coming, and the stock price was still down in afternoon trading on Friday.

Throughout the trade conflict, Beijing has demonstrated a willingness to respond to the Trump administration’s tariffs as proportionately as possible.

On Friday, China’s foreign minister, Wang Yi, said that “adding tariffs is definitely not the correct way to resolve economic and trade frictions.” American officials were waiting to see how China planned to retaliate.

The trade imbalance between the two countries leaves China with limited options for imposing additional tariffs on imports from the United States. Beijing could introduce different kinds of barriers, including surprise inspections, license rejections for American companies or a broadening of China’s “unreliable entities” list.

Analysts have also suggested that China could consider curbing exports of so-called rare-earth minerals to the United States, reinstate a tariff on American cars or continue to shun soybeans from American farmers.

Throughout the yearlong dispute, China and the United States have continued to talk through their disagreements. China’s next move may be to give the silent treatment a try.

The Fed was already laser-focused on the trade war before Mr. Trump’s latest tariff announcement. Officials lowered interest rates this week for the first time in more than a decade, partly because of the uncertainty stoked by the tariffs and the risk that they pose to the economic outlook.

Fed officials do not believe that the tariffs already in place have by themselves hurt growth significantly. But policymakers worry that the extended fight is causing businesses to hold back on investment, which could ultimately hurt the broader economy.

Mr. Trump’s choice to escalate the fight with China puts Jerome H. Powell, the Fed chair, and his colleagues in a difficult position. Their job is to keep the economy operating at an even keel. But by lowering rates, which can help keep growth steady and buttress the stock market, the Fed may inadvertently give Mr. Trump the cover he needs to pursue his trade spats.

Mr. Powell has often said that the Fed would keep its focus on its two statutory responsibilities: sustaining maximum employment and stable inflation.

On the latter point, tariffs offer the Fed a surprise silver lining. They could drive inflation higher if companies raise prices on imported goods. The central bank has tried to coax prices up to, or even slightly above, its 2 percent inflation target — a goal it has undershot for years. Officials might seize on an opportunity to prove that they are ready to accept hotter price gains.

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Trump Sees a China Trade Deal Through a New Prism: The 2020 Election

Westlake Legal Group 10dc-trumpchina-sub-facebookJumbo Trump Sees a China Trade Deal Through a New Prism: The 2020 Election Xi Jinping United States Politics and Government United States Economy Trump, Donald J Sanders, Bernard Protectionism (Trade) Presidential Election of 2020 Navarro, Peter Mnuchin, Steven T Lighthizer, Robert E Kudlow, Lawrence A International Trade and World Market Buttigieg, Pete (1982- ) Biden, Joseph R Jr Bannon, Stephen K

WASHINGTON — When President Trump had finished mocking the field of Democratic presidential candidates at a rally in Florida this week (“Sleepy Joe,” “Crazy Bernie” and “Boot-edge-edge”), he pivoted abruptly to his intensifying trade war with China. The segue was no accident: Mr. Trump is determined to present himself as tougher on the Chinese than any of his potential challengers in 2020.

“Representing us against President Xi of China?” a sarcastic Mr. Trump said of Pete Buttigieg, the young mayor of South Bend, Ind. “That’d be great.” Taking aim at former Vice President Joseph R. Biden Jr. earlier in the day, he said that China had pulled back from a trade deal because it wanted to wait him out and negotiate with a President Biden or “one of the very weak Democrats, and thereby continue to rip off the United States.”

Election-year politics have crept into Mr. Trump’s trade policy.

For months, the prospect of a landmark trade agreement with China has tantalized Mr. Trump. But now, according to analysts and several former aides, his political calculus seems to have flipped. His recent statements suggest he now believes that demonstrating his toughness with the Chinese and walking away from a deal might well put him in a better position politically than signing one.

Imposing new tariffs on China is likely to hurt American farmers, rattle the stock market and possibly damage the economy. But signing an agreement could expose Mr. Trump to attacks by Democrats, particularly if it is perceived as weak. A hard line, on the other hand, would allow the president to cater to his political base while heading off any Democratic attempts to outflank him as the great protector of American workers.

“The days of being soft on China are over,” said Stephen K. Bannon, the former White House chief strategist for Mr. Trump, who shaped the economic message of his 2016 campaign and has warned repeatedly about the dangers posed by China. “Politics now drives the economics.”

Bashing China is a well-worn election-year tactic for both Democrats and Republicans. But Mr. Trump has upended the usual practice by pursuing actions against China that are every bit as aggressive as his campaign messaging. His protectionist instincts defy mainstream Republican orthodoxy and align him more with progressives like Senators Bernie Sanders, independent of Vermont, and Elizabeth Warren, Democrat of Massachusetts.

Mr. Sanders has vowed to label China a currency manipulator — something Mr. Trump had promised to do during his campaign but was talked out of by advisers. And he has criticized Mr. Biden for voting for permanent normal trade relations with China and for saying, during a recent campaign stop in Iowa: “China is going to eat our lunch? Come on, man.”

“It’s wrong to pretend that China isn’t one of our major economic competitors,” Mr. Sanders said in a tweet. “When we are in the White House, we will win that competition by fixing our trade policies.”

Several of Mr. Trump’s current and former aides — including Mr. Bannon and Peter Navarro, his trade adviser — have long argued that being tough with China and never accepting a deal is the right course. They were countered by more mainstream figures like Treasury Secretary Steven Mnuchin and Larry Kudlow, the president’s chief economic adviser, who warned Mr. Trump that a prolonged trade war would buffet both the economy and financial markets.

In recent weeks, however, Mr. Trump’s campaign advisers have also started to echo the no-compromise approach, according to a former official. That, combined with Mr. Biden’s potential political weakness on China, has shifted Mr. Trump’s thinking away from those who urged a deal.

At his rally this week in Panama City, Fla., Mr. Trump claimed that Mr. Biden was telling supporters that foreign leaders told him they hoped he would defeat Mr. Trump in 2020. “Of course they do,” the president told his crowd, “so they can continue to rip off the United States.”

For Mr. Trump, the decision on whether to abandon trade talks with China will hinge on more than politics. Trade is one of the few issues where he has deeply rooted ideological convictions, dating back to the 1980s. Mr. Trump views his aggressive tactics with Beijing as a way to break a pattern of Chinese dissembling that he contends has characterized China’s negotiations with the last three American presidents.

From the earliest days of Mr. Trump’s presidency, he has viewed a deal as a major political victory and made it one of his top priorities.

By the beginning of this year, he had grown impatient with the pace of negotiations and began pressing his advisers for a deal. In February, as negotiators were still early in the process of drawing up a text, he broached the idea of a “signing summit” with President Xi Jinping at Mar-a-Lago, his club in Palm Beach, Fla.

Mr. Trump’s eagerness for a deal encouraged Mr. Mnuchin and Robert Lighthizer, the United States trade representative, to give him overly optimistic reports about their progress, according to a person familiar with the talks, to avoid both his anger and an impulsive tweet or statement that might complicate the talks.

Last Friday evening, after yet another visit by Mr. Mnuchin and Mr. Lighthizer to Beijing, the Chinese sent the Americans a diplomatic cable containing a heavily redacted version of the text that the two sides had been working on, with modifications to all seven chapters of the 150-page document. Among other things, the changes walked back commitments to codify some parts of the agreement in Chinese law.

The administration’s hawks saw the changes as proof that China never intended to keep its promises, and the revisions seem to have given Mr. Trump a genuine change of heart that he expressed repeatedly this week.

On Sunday, Mr. Trump fired off a pair of tweets criticizing the Chinese and pledging to increase tariffs, and by Friday he had increased the tariff on $200 billion worth of Chinese imports to 25 percent from 10 percent. And he said he would start a process to levy a 25 percent tariff on virtually every other Chinese export.

It is not clear whether Mr. Trump has reverted from the eager deal maker to the anti-China hawkishness of the 2016 campaign. The risks of an all-out trade war are considerable. Political analysts said voters were likely to judge the president’s actions by how they affected their economic fortunes, not by whether he looked tougher than the Democrats. To some extent, that is true even of Mr. Trump’s supporters.

“They have been willing to give him the benefit of the doubt because he is addressing the issue,” said David Winston, a strategist who advises Republicans. “Their attitude is, ‘We’re with you in wanting to do this, but ultimately, it’s got to produce a positive impact for the country.’”

Yet there are also political risks for Mr. Trump in agreeing to a deal, particularly if he ends up with an agreement that has the same lack of teeth as those of his predecessors. Democratic candidates would most likely pounce on that as evidence that Mr. Trump’s blustering style does not produce results.

“A weak deal, including one that does not stop cybertheft by China, will be another proof point for Democrats to say that at the end of the day, Trump just doesn’t get the job done,” said Geoff Garin, a veteran Democratic pollster.

Mr. Garin said his firm had conducted research for Democrats that showed undecided and independent voters were troubled by the decline in the income of farmers because of Chinese retaliation for Mr. Trump’s tariffs.

“The China trade situation is particularly important because it ties his impulsive and erratic nature to real-world consequence for Americans, in terms of leaving many workers and farmers worse off than before,” he said.

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As China Trade Talks Stall, Xi Faces a Dilemma: Fold? Or Double Down?

Westlake Legal Group as-china-trade-talks-stall-xi-faces-a-dilemma-fold-or-double-down As China Trade Talks Stall, Xi Faces a Dilemma: Fold? Or Double Down? Xi Jinping United States International Relations United States Trump, Donald J Lighthizer, Robert E International Trade and World Market China

BEIJING — As Chinese and American officials try to reach a trade deal, Xi Jinping faces a painful, possibly damaging, choice: to try to protect his aura of indomitability or retreat after President Trump accused China of reneging on the terms of a draft agreement and threatened to raise tariffs.

The stakes rose sharply for the Chinese leader this week after Mr. Trump and his chief trade representative, Robert Lighthizer, publicly accused China of backing down on commitments. The sticking point appeared to be a late decision by Mr. Xi to reject American demands that China change laws constraining American businesses.

When Mr. Trump leapt onto Twitter to complain, it was a public rebuke that put Mr. Xi in a tight spot.

Mr. Xi is China’s most powerful leader in decades, and he guards his image as a visionary statesman guiding his country to greatness. But China’s relationship with the United State is its most important, and if ties between the countries are mismanaged, that could damage China’s economy and tarnish Mr. Xi’s authority.

Trade talks that just last week seemed close to fruition have abruptly become a flash point in the rocky relationship. Mr. Xi now faces questions at home over whether he miscalculated Mr. Trump’s resolve, and domestic rumblings could grow if the United States forces Mr. Xi to make concessions or if the talks break down.

“Xi is walking a tightrope,” said Paul Haenle, a former China director on the National Security Council who now runs the Carnegie-Tsinghua Center For Global Policy in Beijing. “He is going to be the one that has to make the most concessions, and that makes all this more difficult for him.”

But geopolitics could help China point to the many ways the sides need each other.

ImageWestlake Legal Group merlin_150664305_6ba73923-5941-40fe-b181-5bb0df1b9c86-articleLarge As China Trade Talks Stall, Xi Faces a Dilemma: Fold? Or Double Down? Xi Jinping United States International Relations United States Trump, Donald J Lighthizer, Robert E International Trade and World Market China

Stacked shipping containers at a port in Shanghai last year.CreditAssociated Press

On Thursday, shortly before the trade talks were set to resume, North Korea shot off short-range missiles. The United States has long pressed China, the North’s main political and economic supporter, to help rein in the country’s provocations.

Even if the timing of the launches is a coincidence, they could serve to remind the United States that it needs China’s help to maintain pressure on the North and keep its nuclear program in check.

Still, a resolution of the trade war during this week’s talks seems challenging.

China had been willing to protect intellectual property and open its markets to American business, but the Trump administration wanted the agreement to specify that some of those changes be made in Chinese law. For China, any legislative change or policy reversal could be a very public — and potentially humbling — reminder that it gave ground under pressure.

“That would bring back painful memories of the days of national humiliation in our history,” said Wang Yong, the director of the Center for International Political Economy at Peking University. “China has made too many concessions.”

The blaring nature of the Trump administration’s broadsides has sharpened the dilemma that Mr. Xi faces in the negotiations.

“To have Trump doing it so publicly is obviously very, very difficult for Xi Jinping,” said Susan L. Shirk, a professor at the University of California, San Diego, who worked as a deputy assistant secretary of state responsible for China under President Bill Clinton. “It makes it much more difficult for him to make the compromises needed.”

Yet if Mr. Xi holds to a tougher line, Mr. Trump could act on his threat to raise tariffs on $200 billion of Chinese goods as soon Friday. Such a step could shake confidence vital to keeping aloft economic growth in China and around the world, Tu Xinquan, a professor at the University of International Business and Economics in Beijing, said in an interview.

President Trump and Mr. Xi with Melania Trump and Mr. Xi’s wife, Peng Liyuan, arriving for a state dinner in Beijing in 2017.CreditDoug Mills/The New York Times

For the party, stable economic growth is fundamental to political legitimacy.

“Everyone may have greater doubts and uncertainty about the future of the Chinese economy, Chinese-U.S. relations or the global economy,” Professor Tu said. “This uncertainty will certainly affect production, investment, and consumption.”

At their first summit meeting just two years ago, Mr. Xi told Mr. Trump that China and the United States had “a thousand reasons” to work well together. But the slow pace of negotiations could tarnish in Mr. Xi’s carefully drawn image at home as a master strategist.

More than two years into the Trump presidency, Chinese officials still appear to struggle to understand the president, his temperament and his negotiating style. American politicians and experts say that Chinese counterparts often fail to grasp how far and fast wariness of China has hardened into hostility.

“There are a lot of voices in Washington that are either sharply or harshly critical of China’s actions in trade, in their military expansionism, in their actions in the South China Sea — fill in the blank,” Senator Chris Coons, a Democrat senator from Delaware, said in an interview in Beijing late last month after meeting Chinese officials.

Mr. Xi’s top economic official, Vice Premier Liu He, who leads the Chinese negotiators, could also suffer a setback in his standing if the latest talks falter.

“If, say, Liu He comes back to Beijing empty-handed, and there’s more tirades from Trump on his Twitter account, I think things could get really wild,” Zhang Jian, an associate professor of government at Peking University said in an interview. “It’s going to spill out of the economic waters.”

Just over a week ago, the outlook for the trade negotiations seemed rosier. Chinese and American officials met in Beijing then for a 10th round of talks aimed at easing trade and economic tensions that spiked after Mr. Trump progressively imposed tariffs on $250 billion worth of goods last year.

Workers assembling electronic connectors in Guangdong Province last year.CreditFreddy Chan/EPA, via Shutterstock

Shortly before the talks last week started, the United States Treasury secretarys Steven Mnuchins said the negotiations were in their “final laps.” After the talks ended, he said on Twitter that they had been “productive.”

But then Mr. Lighthizer and other Trump administration officials accused Chinese negotiators of trying to reverse concessions they had already made. The air of optimism evaporated.

The Trump officials said that China had retreated from draft agreements calling on its legislature to change laws that have threatened or constricted American trade and business. Two Chinese scholars in Beijing said they were told by well-placed officials that the changes in commitments appeared after Mr. Xi reviewed the draft deal. They spoke on condition of anonymity to discuss internal party matters.

The Chinese government disputed the claims of an underhanded rollback, saying Thursday it was normal for negotiating sides to disagree during talks. “China values trustworthiness and keeps its promises,” Gao Feng, a spokesman for the Ministry of Commerce, said at a briefing. “It has never changed.”

The Chinese have also complained about dealing with a mercurial president they say is apt to turn private disagreements into public brawls.

“Trump’s personality is different, we all know,” said Professor Tu. “He would take something that hasn’t been settled in negotiations and treat it as so-called backsliding by China, or whatever, and then announce it.

“An ordinary president,” he said, “wouldn’t act this way.”

Negotiations with the United States have always been fraught for Chinese officials. Memories of bad blood linger.

In 1999, Zhu Rongji, then the vice premier, went to Washington hoping to reach a breakthrough deal that would open China’s way to joining the World Trade Organization — only to have President Clinton balk.

President Bill Clinton and Premier Zhu Rongji at the White House in 1999.CreditPaul Hosefros/The New York Times

Mr. Zhu returned to Beijing with his reputation damaged. A month later, the United States accidentally bombed China’s embassy in Belgrade during NATO’s war over Kosovo, igniting bitter protests against Washington across China. It took almost three more years before China joined the W.T.O.

Now Mr. Xi must find a way to satisfy the Trump administration without appearing to give away too much. That could be more difficult if Mr. Trump continues to pelt Mr. Xi with demands on Twitter.

“I think the Chinese side is in an uncomfortable position, as they are reactive instead of controlling the situation as they are accustomed,” said James L. McGregor, a consultant in Shanghai and former chairman of the American Chamber of Commerce in China.

There are grave risks for both sides if the trade talks collapse entirely, many economists say.

Some Chinese academics and business executives have already argued privately and online that Mr. Xi misjudged how far he could push Mr. Trump and promote China as a potential rival to the United States’ dominance.

Mr. Trump, too, would not walk away unscathed. A breakdown in negotiations could weigh down American stock prices, which Mr. Trump invokes as an measure of his policy successes.

Even if the talks in Washington end with handshakes and a new agreement, the past week has laid bare a lack of trust between China and the United States. Tensions over technology competition, spying, Taiwan, the South China Sea and other trouble spots could well up, said Professor Zhang, the Peking University academic.

“The more important thing is not whether there’s a deal or no deal,” he said. “It’s the consensus in the American political class about China as a threat.”

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