By Clay Chandler and Eamon Barrett
October 13, 2018

The Wall Street Journal reports that the White House is making arrangements for President Trump to meet with Chinese president Xi Jinping in late November on the sidelines of the Group of 20 summit in Buenos Aires. The Journal says key White House advocates of the meeting are Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow, who fret that the trade brawl poses a growing risk to global financial markets.

No word, though, as to whether the idea has support from the administration’s China hawks, trade representative Robert Lighthizer and economic adviser Peter Navarro.

China, for its part, hopes the encounter will “provide an opportunity for both sides to ease…escalating trade tensions,” according to the Journal. Beijing may be betting Trump will be in a weaker bargaining position by late November if, as expected, the Republican Party loses its majority in the House of Representatives in upcoming mid-term elections.

China could be in a more vulnerable position then as well. Chinese exports surged to $34 billion in September, a new record. But many economists believe the increase was an aberration reflecting efforts to front-load deals ahead of trade tariffs, and expect China’s foreign trade—and its broader economy—to slow dramatically in the fourth quarter.

Already the trade war is claiming US casualties. Ford Motor Corp., whose CEO Jim Hackett said last week that Trump’s tariffs on imported metals have cost the company $1 billion, is reportedly preparing to layoff tens of thousands of US workers. In an interview with Fortune‘s Susie Gharib, United Technologies CEO Gregory Hayes had some blunt words of advice for Trump on the subject of tariffs. “Mr. President, these are a bad idea,” he said. “Tit-for-tat trade wars, nobody wins.”

Tensions between Washington and Beijing are roiling stock markets on both sides of the Pacific. A report released this week by Bain & Company finds that, in the first half of 2018, China’s outbound mergers and acquisitions plunged 61%, to $22 billion, down from $56.7 billion the same period last year.

It’s impossible to predict whether a Trump-Xi summit will lead to an abrupt thaw in the US-China Cold War. But given the length and breadth of grievances with China articulated by Trump and his advisors, such a breakthrough seems unlikely.

More China news below.

Clay Chandler
@claychandler
clay.chandler@timeinc.com

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