How the White House China Trade Doves Got Turned to ‘Ashes and Dust’

Talks between the U.S. and China resumed in Washington Wednesday but U.S. officials have very little expectations that negotiations will make much progress.

While it is possible that talks between mid-level officials could establish a “roadmap” for higher level talks, U.S. officials say that remains to be seen.

“Right now, we’re winning. It’s going to get tougher but there’s no rush to do a deal. The President is not in a place where he wants or needs a deal right now,” a person familiar with the Trump administration’s thinking said.

U.S. officials say China’s refusal to agree to real reforms brought talks to a halt in June. Several months of high-level meetings with no progress to show for it left U.S. officials frustrated. Many believe that China never intended to offer acceptable terms to begin with.

The breakdown of talks with China has strengthened the position of trade hawks in the administration, according to people familiar with the matter.  Even self-styled free traders like White House economist Kevin Hassett now sound decidedly hawkish on China.

“What happened is that buys like Larry Kudlow and [Treasury Secretary Steven] Mnuchin went into this thinking China was willing to work with us, while [U.S. Trade Representative Robert] Lighthizer predicted China would resist any changes until they were shown we meant it with the tariffs. China proved Lighthizer got it right,” one former administration official said.

“The failure of the Trade Avengers mission back in May basically obliterated the trade dove position. China wouldn’t budge. So the doves got turned to ashes and dust,” an administration official said.

The negotiations this week are being led by Treasury undersecretary David Malpass. Deputy U.S. Trade Representative Jeff Gerrish will represent Lighthizer’s office in the talks.