To hear President Donald Trump tell it, he was made for a moment like this: A high-stakes face-off. A ticking clock. A cagey adversary.
The man who calls himself a supreme dealmaker will have the opportunity this week to put himself to the test. The question is whether he can defuse a trade war with China that is shaking financial markets and threatening the global economy — and perhaps achieve something approximating a breakthrough.
Trump is to meet with his Chinese counterpart, Xi Jinping, during the Group of 20 summit in Buenos Aires, Argentina, on Friday and Saturday. Unless the two leaders can achieve a truce of sorts, their conflicts will likely escalate: On Jan. 1, the tariffs Trump has imposed on many Chinese goods are set to rise from 10 per cent to 25 per cent, and Beijing would likely retaliate.
Most analysts say they doubt Trump and Xi will reach any overarching deal that would settle the dispute for good. The optimistic view is that the two sides may agree to a cease-fire that would buy time for more substantive talks and postpone the scheduled escalation in U.S import taxes.
Yet no one really knows. Each side seems prepared to wait out the other in a conflict that could persist indefinitely.
In advance of the meeting, Trump has sounded his usual note of boastful confidence. Speaking to reporters on Thanksgiving Day, he said:
"I'm very prepared. You know, it's not like, 'Oh, gee, I'm going to sit down and study.' I know every stat. I know it better than anybody knows it. And my gut has always been right."
Most trade analysts are skeptical that any significant agreement is likely this week.
"Expectations should be very low," said Wendy Cutler, vice president of the Asia Society Institute and a former US trade official who negotiated with China. "We need to be very clear-eyed. It's going to be a very difficult negotiation. The issues at hand don't lend themselves to quick solutions."
The trade war erupted last fall after Trump imposed import taxes on $250 billion of Chinese goods, and Beijing retaliated with tariffs on US exports. The justification for the US move, according to Trump, is that Beijing has long deployed predatory tactics in its drive to supplant America's technological dominance. The administration alleges — and many trade experts agree — that Beijing hacks into US companies' networks to steal trade secrets and forces American and other foreign companies to hand over sensitive technology as the price of access to China's market.
Beijing disputes those allegations and asserts that Trump's sanctions are merely an effort to hinder an ambitious rival.
Besides the scheduled escalation in US tariffs on $200 billion in Chinese goods — an additional $50 billion in Chinese imports already face the higher tax — another threat looms: Trump has threatened to tax $267 billion more in Chinese imports. At that point, just about everything Beijing ships to the United States would face a higher import tax.
Growing concerns that the trade war will increasingly hurt corporate earnings and the US economy are a key reason why US stock prices have been sinking. As of Friday's close, the Standard & Poor's 500 index has shed roughly 10 of its value since setting a record high Sept. 20.
Joining other forecasters, economists at the Organization for Economic Co-operation and Development last week downgraded their outlook for global economic growth next year to 3.5 per cent from a previous 3.7 per cent. In doing so, they cited the trade conflict as well as political uncertainty.
Some big US companies, in reporting quarterly earnings in October, warned that they were absorbing higher costs from Trump's increased tariffs, which have been imposed not only on Chinese goods but also on imported steel and other goods from other countries.
"We need some certainty," said Craig Allen, president of the US-China Business Council and a former American diplomat. "The US and China cannot go into a trade war and not affect global markets ... We need to resolve our differences."
Yet as Trump and Xi prepare to meet, the backdrop is hardly encouraging. Acrimony between the two sides disrupted this month's Asia Pacific Economic Cooperation summit in Papua New Guinea. The 21 APEC countries, torn by differences between Beijing and Washington, failed to agree on a declaration on world trade for the first time in nearly three decades. Vice President Mike Pence and Xi sniped at each other in speeches. Then last week, US Trade Rep. Robert Lighthizer issued a report charging China's efforts to steal US trade secrets have "increased in frequency and sophistication" this year despite American sanctions.
"China fundamentally has not altered its acts, policies, and practices related to technology transfer, intellectual property, and innovation, and indeed appears to have taken further unreasonable actions in recent months," the report concluded.
The tenor of the report suggested that the US would take a hard line into this week's talks. In the meantime, "the amount of uncertainty is unprecedented and very disquieting to the markets," said Allen of the US-China Business Council.