Trump Says He May Drop Phase One Compliance Probe for China
Treasury Secretary Scott Bessent said after two days of meeting with Chinese negotiators, he anticipates a threatened additional 100% tariff on Chinese goods won't come Nov. 1, and that the Chinese will defer their critical minerals export control licensing scheme.
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"I believe we've reached a very substantial framework that will avoid that and allow us to discuss many other things with the Chinese," said Bessent, who was being interviewed on "Meet the Press" Oct. 26. "I think we will be able to discuss them helping us get this terrible fentanyl crisis under control. I think we are going to be able to discuss substantial soybean and ag purchases for our American farmers. I think we are going to be able to discuss more balanced trade," he said. He said he also thinks President Donald Trump will talk to President Xi Jinping about ending Russia's war in Ukraine.
Sidley Austin trade co-lead Ted Murphy wrote in a note to clients on Oct. 27: "While nothing is certain, a deal that includes no new tariffs, the United States lowering the existing IEEPA fentanyl tariff, China agreeing to substantial U.S. agricultural purchases, relaxed/delayed export controls by both sides, and something on the U.S. shipping fees would not be surprising. President Trump is in 'deal mode' and is unlikely to let the opportunity of meeting with President Xi in person get away without a deal. For China’s part, we expect that they will drive a tough bargain."
On Air Force One between Malaysia and Japan on Oct. 27, Trump was asked about the new Section 301 investigation launched last week on China's compliance with the phase one deal, and whether it could be paused as a result of the talks.
Trump said, "That may be a part of the talk, a part of the negotiation."
U.S. Trade Representative Jamieson Greer, who leads that investigation, interjected, "That was a separate deal from before." He said that many in the U.S. have the view that there are key aspects that are worth looking into. "That's continuing," he said, "We're really focused...," and then Trump cut him off.
"If all works out well, I'm sure they'll be able to talk us out of it," Trump said.
The top Democrat on the House Ways and Means Committee and the top Democrat on its trade subcommittee issued a joint statement critical of Trump's approach.
Rep. Richard Neal, D-Mass., and Rep. Linda Sánchez, D-Calif., wrote, "President Trump is cowering before China’s threat to ramp up export controls on rare earths and magnets. His supposed ‘trade deal’ fails to address our core issues with the world’s biggest trade cheat, China.
"Instead, it sells out American workers, farmers and our national security for what seem like flimsy commitments from China to resume purchases of American soybeans and to ‘keep on talking’ on our trade issues."
The pair said that the administration's negotiators have not secured meaningful reforms on issues like "unfair industrial subsidies that have gutted U.S. manufacturing, its forced technology transfers and its ongoing theft of American intellectual property," the issues behind the original Section 301 tariffs and the subsequent phase one deal.