Trump: A trade deal with China is ‘absolutely possible’ this week

United States President Donald Trump said on Wednesday that it is possible he will emerge from a meeting with Chinese leader Xi Jinping this week with a deal that means there is no need to impose more tariffs on goods from China.

Trump is expected to confer with Xi at the G20 summit in Japan this weekend, in the first meeting between the leaders of the world’s two biggest economies since November.

Relations between the two countries have deteriorated since talks to end a trade war collapsed in May, when the US accused China of reneging on pledges to reform its economy.

“It’s absolutely possible … We have to get a good deal,” Trump said in an interview with news channel Fox Business Network. “It’s possible that we’ll make a deal but I’m also very happy where we are now.”

Negotiators have not met since trade talks broke down, and US and Chinese sources knowledgeable about the state of talks have told Reuters news agency that the best-case scenario for the Xi-Trump meeting is to resume negotiations.

Trump said Chinese leaders “want to make a deal. They want to make a deal more than I do”.

Trump reiterated that he will impose tariffs on additional Chinese goods if there is no progress on the trade dispute at the meeting.

“I would do additional tariffs, very substantial additional tariffs, if that doesn’t work, if we don’t make a deal,” Trump said.

Trump said he could consider placing a 10 percent duty – instead of the 25 percent one that he initially proposed – on $300bn worth of Chinese goods.

China and the US have already imposed tariffs of up to 25 percent on hundreds of billions of dollars of each other’s goods in a trade war that has lasted nearly a year.

Fitch Ratings on Wednesday forecast that world economic output would slow by 0.4 percentage points if Trump slapped 25 percent tariffs on another $300bn of imports from China. That would cover nearly all the remaining Chinese imports into the US – including consumer products such as mobile phones, computers and clothing.

US retailers have warned that the tariffs could boost US consumer prices significantly.

Trump said China knows what the US needs for a trade deal, and pushed for China to return to the negotiating table with the same concessions it had made before talks abruptly ended in May.

The two sides could agree not to impose new tariffs as a goodwill gesture to get negotiations going, a US official said on Tuesday.

Lasting Changes

Trump has bipartisan support on taking a tough stance on China, although not for his use of tariffs as a tool to exert pressure on Beijing.

Earl Blumenauer, a US Congressman and senior opposition Democrat, said on Wednesday that he hoped the standoff with China would result in lasting changes.

“We’ve gone this far – we ought to be working to try and have some of the structural changes, some of the advantages, some of the [intellectual property] protections, and China living up to its obligations under the [World Trade Organization],” he said.

Blumenauer added that he disagreed with what he called Trump’s “drive-by tariffs” and that he hoped the president would not accept a deal that simply involved selling more goods to China rather than changing bilateral terms of trade.

Trump said if Washington is unable to reach a deal, his plan is to reduce business with China. Asked about companies relocating production from China to Vietnam, he said Vietnam treated the US even worse than China did.

The US is cracking down on companies that have used countries such as Vietnam and Cambodia as staging posts to ship goods from China to the US without paying tariffs.