◼ ECONOMICS Bloomberg Businessweek November 18, 201935placedChinesetelecommunicationsgearmaker
HuaweiTechnologiesCo.ona U.S.Departmentof
Commerceblacklist,restrictingitsabilitytobuy
hardware,software,andservicesfromAmerican
high-techsuppliers.
TheHuaweidecisioncasta shadowona late
JuneencounterbetweenTrumpandXiontheside-
linesoftheGroupof 20 summitinOsaka,where
theChinesepresidentaskedhisU.S.counterpart
toeasepressureonthecompanyand—accordingto
Trump—promisedtoimmediatelybuy“atremen-
dousamount”ofAmericanagriculturalproducts.
TrumpagreedandreturnedfromOsakaoptimistic
thata dealwasinsight.ButbythetimeU.S.nego-
tiatorsreturnedfroma roundoffollow-uptalksin
ShanghaiinlateJuly,themoodwassouring.“That
istheproblemwithChina,theyjustdon’tcome
through,”readoneina barrageofTrumptweets
onJuly30,inwhichhecomplainedthatBeijing
hadn’tliveduptoitspromisetorestartagricul-
turalpurchases.
Thatsetuponeofthemostvolatilemonthsof
thetradewar,feedingrecessionfearsintheU.S.as
signsofa slowdowninmanufacturingcontinued
tobuild,particularlyinkeypresidentialelection
battlegroundstates. Inearly August,Trump
announceda majorescalation—tariffscovering
theremaining$300billioninChinaimportsthat
wouldstarttotakeeffectSept.1. Athisbehest,
theTreasuryDepartmentofficiallylabeledChina
a currencymanipulator.Then,onAug.23,the
presidentdirected U.S.businessestoexplore
waysofgettingoutofChina.“OurgreatAmericancompaniesareherebyorderedtoimmediately
startlookingforanalternativetoChina,includ-
ingbringingyourcompaniesHOME,”hetweeted.
Marketstumbled,andpanickedchiefexecutive
officers and donors demanded to have a word with
the president. Among them were Blackstone’s
Stephen Schwarzman and Las Vegas Sands CEO
Sheldon Adelson, according to people close to the
negotiations who asked not to be identified because
the calls were private. They say the interventions
succeeded. From that moment on, Trump was in
deescalation and dealmaking mode.
Fears of an economic slowdown in the U.S. that
coalesced in August also changed the equation.
Publicly, Trump’s advisers point to historic lows in
unemployment and modest inflation to bat back
concerns. They blame the Federal Reserve and a
strong dollar for growth well below the 3% to 4%
Trump once promised. (The U.S. grew at an annual
rateof1.9%inthethirdquarter.)Buttheangst
thatthetradewarmaybeexactinga greater-than-
anticipated economic toll is thinly veiled.
Worries about the economy burnished the attrac-
tiveness of a phase one deal that puts on hold new
tariffs that would directly hit U.S. consumers. A par-
tial pact would also reward American farmers for
standing with Trump, despite being cut off from one
of their most important markets. According to peo-
ple familiar with the negotiations, missing from the
partial deal are measures to address a key U.S. con-
cern: how China often forces foreign companies to
hand over technology. There’s also nothing related
to the vast web of subsidies China uses to help“Bigdayof
negotiationswith
China. Theywantto
make a deal,butdoI?”
10/10“The deal I just made with
China is, by far, the greatest and
biggest deal ever made for our
Great Patriot Farmers in the
history of our Country.”
10/12“Our great American
companies are hereby
ordered to immediately
startlooking for an
alternative to China,
including bringingyour
companies HOME.”
8/23
“China and the USA are
working on selecting
a new site for signing
ofPhaseOneofTrade
Agreement,about
60%oftotaldeal.”
10/31● 9/20
A two-day meeting
ofU.S.and Chinese
deputiesends with both
sidesdescribing the
talksasproductive. In
a showofgoodwill, the
U.S.traderepresentative
issuestariff exclusions
onsome400 Chinese
products.● 9/23
Chinese companies
resume modest
purchases of U.S.
soybeans.● 10/7
Commerceadds 28
Chinesecompaniesto
itsblacklistovertheir
allegedinvolvementin
human-rightsabuses
againstUighurMuslims
in Xinjiang.Beijing
denouncesthemoveas
interference in Chinese
sovereignty.● 10/11
Trump meets with
Chinese Vice Premier
Liu He and announces a
“substantial phase one”
deal, predicting it will be
concluded and signed
in three to five weeks.● 11/8
Trump tells reporters
he hasn’t agreed to
rollbacks of U.S. tariffs
sought by China, sowing
fresh doubts about
whether a phase one
deal is attainable.