Trump thinks he has the upper hand in the trade talks with China. Mr. Trump told cabinet members he’ll raise the tariff percentage again if China doesn’t agree to his terms. Trump wants to keep the tariffs in place after a phase one deal becomes reality.
Chinese negotiators claim China will buy $20 billion in farm products and make it easier for U.S. companies to do business with China as well as work on stopping intellectual property thief when phase one gets signed. But Liu He, China’s top negotiator, said none of those things will happen unless Trump drops the upcoming December tariffs, and he reduces tariff on $360 billion worth of Chinese products.
The president thinks he can force China to expand the terms of his phase one deal by standing firm and throwing the trade ball back in China’s court. Several news reports claim Trump wants to throw in the tech part of the trade deal before he drops tariffs. Other reports claim Trump wants to keep the tariffs in place to collect more money from American consumers.
Whatever Trump wants won’t happen unless he stops trying to intimidate the Chinese, according to the Chinese news agency. President Xi knows Trump will back out of any deal if he thinks he can get more from China. The trade war hurts China’s economy, but it also hurts Trump’s economy. Gross Domestic Product growth fell below two percent in the third quarter. China’s GDP product growth is 6.0 percent. The Chinese expect growth to drop a tenth of a percent in the fourth quarter.
Huawei Technologies is at the center of the trade war. Mr. Trump decided he wanted to use Huawei as a bargaining chip in trade negotiations. Trump put Huawei and other Chinese tech companies on his list of countries tech companies can’t buy from or sell. Huawei lost $10 billion in revenue when Trump made that call. But CEO Ren Zhengfei told the press his company is still a $100 billion company. Thanks to Huawei’s 5G technology the company will recoup the lost revenue in other countries. Angela Merkel told the press Germany will use Huawei’s 5G platform, and 70 other countries plan to use Huawei’s 5G technical expertise.
Ren told the press the new 90-day extension doesn’t make a difference in his company’s revenue projections. Zhengfei decided he would move on after Trump damage the relationship he had with American tech companies. But Ren also said he would let U.S. telecoms use his 5G technology license to prove Trump lied when he said Huawei spies for the Chinese government.
