Donald Trump, the US president, vowed to hold a phone call “soon” with Xi Jinping, his Chinese counterpart, as he suggested that the trade war raging between the world’s largest economies would be “fairly short”.
In comments made as he left New Jersey for a rally in New Hampshire on Thursday evening, Mr Trump sought to ease concerns about the economic confrontation with Beijing and said face-to-face negotiations between top officials of the two countries were on track to resume next month.
Mr Trump and his advisers have been on the defensive since the White House’s announcement in early August that the US would slap 10 per cent tariffs on $300bn of additional Chinese imports later this year — a move that triggered strong equity market losses and increased fears of a global economic slowdown.
“I think we’re having very good discussions with China. They very much want to make a deal,” Mr Trump said. “I think the longer it goes the stronger we get . . . I have a feeling it’s going to go fairly short.”
On Tuesday, the White House decided to defer the imposition of levies on $156bn of those products until December, to protect consumers from experiencing higher prices during the Christmas shopping season. That failed to prevent a huge sell-off in equity markets on Wednesday, which was only partially offset by a rally on Thursday.
The partial reprieve also left officials in Beijing seemingly unfazed. China’s state council has vowed to retaliate against the US for the new looming tariffs, saying the US had “deviated from the correct track of consultation and settlement of differences”.
Mr Trump’s expectation of a short duration for the economic stand-off with Beijing clashes with his own previous statements, and those of many analysts, who see China digging in for the long haul and possibly even waiting until after the 2020 US presidential election to strike a deal.
The crisis in Hong Kong has further complicated the picture, as US lawmakers are putting increasing pressure on Mr Trump to take a tougher stance to prevent a crackdown by Beijing in the city-state. Mr Trump said he believed Mr Xi could “work that out in a humane fashion”.
“Should China’s security forces stage a large-scale intervention in Hong Kong, the linkage to trade would become direct,” wrote Michael Hirson, an analyst at the Eurasia Group, in a note on Thursday. “Even if he were so inclined, Mr Trump would likely have no choice but to cancel trade talks.”
US and Chinese negotiators were close to a deal to end their trade war in early May, but the talks were abruptly cancelled after officials in Washington accused the delegation from Beijing of retreating from its pledge to codify its commitments on intellectual property and forced technology transfer into Chinese law.
The first escalation in tariffs happened shortly after, but a summit between Mr Xi and Mr Trump in Japan in late June led to a truce which calmed the mood. Tempers erupted again after the US accused China of failing to follow through on the terms of the ceasefire, in particular its planned purchases of American farm goods.
Even though US officials have betrayed some concern about the impact of the trade war on the economy, Mr Trump was buoyed by strong retail sales numbers, and results from Walmart on Thursday that showed the resilience of US consumers, even as business investment figures are slumping.
“Walmart, a great indicator as to how the U.S. is doing, just released outstanding numbers. Our Country, unlike others, is doing great!,” Mr Trump tweeted.