Trump’s Trade War With China May End in a Draw

(Bloomberg) --

An eight-month trade war looks like it’s finally nearing an end, and not necessarily because China is ready to bow to U.S. President Donald Trump’s demands.

Both sides are close to a deal that could lift most or all U.S. tariffs if Beijing follows through on pledges ranging from better protecting intellectual-property rights to buying a significant amount of American products, Jenny Leonard reports.

Trump and President Xi Jinping each have an incentive to avoid further tariff increases that may hurt the global economy. Xi doesn’t want to see job losses that could undermine the Communist Party’s legitimacy, while Trump has linked his success to the economy and stock-market gains.

The question now is whether Trump will lift penalties right away as China would like, or listen to trade hawks in his administration who want them in place until U.S. demands are met on structural reforms such as government support for state-run companies.

For Trump, any decision is a bet on his 2020 election campaign strategy. Given how global markets jumped today on optimism of a deal, Xi could walk away relatively unscathed.

Global Headlines

A star is born? | House Judiciary Chairman Jerrold Nadler might be about to become a household name. The veteran New York City lawmaker – whose committee would run any impeachment proceedings – plans to lodge a sweeping document request today, part of what he described as an aggressive investigation into whether there’s evidence of wrongdoing by Trump. He could be aided by the submission – possibly within days – of Special Counsel Robert Mueller's long-awaited report on alleged Russian election meddling.

• Chris Strohm and Larry Liebert look at the explosive chain of events Mueller's report could kick off.

Messaging bills | House Democrats are using their majority to push gun-control, campaign-finance and voting-rights legislation. Senate Republicans are advancing abortion restrictions while trying to put the Democrats on the spot with a vote on climate change. None of the proposals stand a chance in a divided Congress. Instead, they're meant to corner the opposing party with tough votes that could be used against them in 2020 campaigns, Laura Litvan and Anna Edgerton write.

Returning challenger | National Assembly leader Juan Guaido, who is leading a campaign to remove President Nicolas Maduro, said he will return to Venezuela today for anti-government protests. The move could dramatically raise the stakes in his standoff with Maduro, who has threatened to arrest him for violating a travel ban. U.S. National Security Adviser John Bolton warned any move against Guaido would trigger “a strong and significant response.”

Brexit boost | Prime Minister Theresa May rolled out a $2.1 billion spending infusion for poorer areas of the U.K., a measure immediately attacked as an attempt to buy support from opposition Labour politicians whose support May likely will need to get her agreement with Brussels ratified. The plan may have already backfired; many lawmakers pointed out that the funding boost is far less than districts have lost from austerity since the financial crisis.

Mixed messages | South Korean President Moon Jae-in praised Pyongyang's offer to dismantle a key nuclear production complex as an “irreversible” step to curb its weapons program. The endorsement represents a break with the Trump administration, which said the proposal wasn't enough to justify sanctions relief. The schism comes as the president blamed House Democrats for contributing to his decision last week to abandon talks with Kim Jong Un by summoning his former lawyer and fixer Michael Cohen to testify.

What to watch:

• Republican Senator Rand Paul said he’ll vote to block Trump’s declaration of a national emergency on the U.S.-Mexico border, a move that’s likely to provide enough votes for the measure to pass the Senate in the coming days and draw Trump’s first veto.
• Estonia’s opposition Reform Party will lead talks on forming a new government after upsetting Prime Minister Juri Ratas's Center Party in yesterday's elections and dodging a challenge from populists who’d threatened to shake up the political landscape of another European Union state.
• Algerians poured into the streets to protest last night's announcement by their octogenarian president, Abdelaziz Bouteflika, that he's planning to run in next month's elections in a bid to win a fifth and final term.

And finally ... When China’s political leaders gather this week to hammer out policy priorities for the year, they'll be focusing on how to fight the three so-called “critical battles” – against pollution, financial risks, and poverty. While the opening of its economy over the past 40 years has lifted hundreds of millions of Chinese out of penury – the most by any country in history – there are still pockets of entrenched hardship, especially in the countryside. The goal this year is to bring more than 10 million people out of destitution.

©2019 Bloomberg L.P.