President Donald Trump is projecting a steely facade as he prepares for a major meeting on trade this weekend with President Xi Jinping of China. But behind his tough talk and threats of larger tariffs is a creeping anxiety about the costs of a prolonged trade war on the financial markets and the broader economy.
That could establish the stage for a truce between the United States and China, several U.S. officials said, in the form of an agreement that would delay new tariffs for several months while the world’s two largest economies try to work out the matters dividing them.
Such a result is not certain. Administration officials have shown deep disappointment with China’s response to Trump’s pressure so far, characterizing it as a list of proposals, transmitted in Chinese, which they say would do little to curb China’s theft of U.S. technology or labels its other predatory trade practices.
But Trump has signaled a new willingness to make a deal with Xi, a leader he has treated solicitously and will meet over dinner on Saturday in Buenos Aires, Argentina, after a summit meeting of leaders of the Group of 20 industrialized nations.
The gyrations in the stock market, the rise in interest rates and thousands of layoffs announced by General Motors this week have all rattled Trump, officials stated, fueling his desire to emerge from his meal with Xi with something he can claim as a victory.
“There’s a better possibility that we can make a deal, and he is open to it,” Trump’s chief economic adviser, Larry Kudlow, said Tuesday. But if the meeting failed to produce a breakthrough, he commented, Trump was “perfectly happy to stand on his tariff policies.”
At the point, the administration plans to raise existing tariffs on $250 billion worth of Chinese goods, to 25 percent from 10 percent, on Jan. 1. Trump has also threatened to regularise tariffs on an additional $267 billion of Chinese goods — a step many fear would plunge the two giants into a full-fledged economic Cold War.