◼ ECONOMICS Bloomberg Businessweek November 18, 201934
adviserswerestartingtodiscusshowtonegotiate
a stage-by-stageagreementandharvestelements
thatbothsideshadalreadylargelyconcurredon,
includinga pacttoavoidcompetitivecurrency
devaluationshashedoutinFebruarywhenthe
ChineseteamwasinWashington.
ToextractconcessionsfromChina,theself-
proclaimed“TariffMan”wouldhavetorollback
somedutiesputinplaceoverthesummer—amove
someofhisadvisers,includingPeterNavarro,the
WhiteHouse’smoststridentChinahawk,oppose.
Ina Nov.8 emailtoreporters,Navarroblamed
“propagandistswithintheChinesegovernment”
forincitingstoriesthata withdrawaloftariffs
mightbenigh.HeandKudlow,whosaystariff
“concessions”areneededtoclosethedeal,have
sparredopenly.
The two men’s battle echoes divides that
haveexistedinsidetheadministrationsincethe
beginning. On Oct. 11, shortly before Trump
satdownwithChina’stopnegotiator,VicePremier
Liu He,in a televisedOvalOffice meeting to
announcea “substantialphaseonedeal,”Lighthizer
andTreasurySecretaryStevenMnuchinmetwith
thepresidentsohecouldsignoffonthestep-by-step
approach.This,theyargued,wasa waytopocket
somewins,takethepressureofftheU.S.economy,
andhaveanothercrackatthetrickyissuesina sec-
ondstage.Onlyonememberoftheteamdisagreed.
Navarro, who was present, appeared intent on
sabotaging the plan and, according to one person
with knowledge of what transpired, interrupted
the two cabinet members so forcefully that Trumpeventually turned to him and said: “Peter, calm
down!” Asked about the incident, Navarro said he
is “always a passionate defender of the president’s
deep understanding of the situation with China and
his practical solutions. But I don’t comment on pri-
vate meetings with the president. What happens in
the Oval should stay in the Oval.”
Within an hour of that exchange, Liu and his
team arrived at the White House to finalize the
truce. The discussion before the cameras arrived
seemed inconclusive to some attending and left
them confused, though Trump would minutes
later praise a “lovefest” in U.S.-China relations
to reporters. In the days that followed, Trump
insisted that the teams were making progress
and that he and Xi would likely sign the deal at a
Nov. 16-17 gathering of the Asia-Pacific Economic
Cooperation forum in Santiago. That summit was
canceled after anti-government protests broke out
in Chile, and a new venue and date haven’t been
decided. In the meantime, the two countries are
still negotiating exactly what each side will con-
cede in a phase one deal.○ ARE WE THERE YET?
The events of the past few weeks fit a pattern of
false dawns in the trade war. At least three other
times a pact seemed within reach, only to col-
lapse in a back-and-forth of recriminations. One
of the key moments came in May, when mis-
calculations by both sides blew up an expan-
sive deal that had taken months to put together.
Within days, Trump threatened new tariffs and“Mymeeting
in Argentina with
President Xi of China
was an extraordinary
one. Relations with
China have taken a BIG
leap forward!”
12/3“I think that China felt
they were being beaten
so badly in the recent
negotiation that they
may as well wait around
for the next election,
2020, to see if they
could get lucky & have a
Democrat win.”
5/11“China dropped
the price oftheir
currency to analmost
a historiclow.
It’s called ‘currency
manipulation.’”
8/5● 5/10
U.S. ratchets up duties
on $200 billion worth of
Chinese imports to 25%,
after negotiations break
down. China raises
tariffs on $60 billion in
U.S. goods in retaliation.● 5/16
The U.S. Commerce
Department blacklists
Chinese telecom
equipment maker
Huawei and 68 affiliates
from doing business with
U.S. suppliers.● 6/29
Trump and Xi meet,
this time in Osaka,
and agree to restart
talks, though the mood
quickly sours.● 8/5
The U.S. Treasury
labels China a
currency manipulator
after Beijing allows
the yuan to breach
the psychologically
important thresholdof
seven to the dollar.
● 12/1
Trump and Xi negotiate
a 90-day truce on the
sidelines of a G-20
meeting in Buenos Aires.
The U.S. says it will hit
pause on new tariffs,
while China commits
to purchasing a “very
substantial” amount of
American goods.Deal or No Deal
Notable moments in the past year of
the U.S.-China trade war,
annotated with Trump’stweets“We’ll never
out-China
China. And
if you spent
10 minutes
in the country,
you’d know
that”