U.S. President Donald Trump poses for a photo with China's President Xi Jinping before their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019.
Kevin Lamarque | Reuters
In this multi-front, multi-year trade war, with shifting deadlines and political headwinds, it has paid for investors to beware the ides of March. May. August. October. And now, December.
In less than two weeks, President Donald Trump must decide whether to slap tariffs on $156 billion in consumer goods made in China – including toys, phones, laptops and clothes, right before the holidays – or move the goalpost yet again in lieu of the comprehensive trade deal he's been seeking.
"If enough substantive progress had been made, he might" be willing to delay, Commerce Secretary Wilbur Ross told CNBC this week. Treasury Secretary Steven Mnuchin said Thursday the two sides were still "on track," for a deal and still talking, but he did not say whether the tariffs would be shelved.
During the Oval Office announcement of the latest truce, Mnuchin assured the public there would be more than enough time to finish the deal and permanently avert further tariffs.
That was two months ago.
Trump now has a complicated calculus to consider: Postponing the tariffs would spare a market selloff and higher holiday prices – and the ire of CEOs like Tim Cook and Jamie Dimon that Trump has come to not only trust but revere. But doing so with anything short of a deal-signing – which Trump said in October was the next step – would mark the fifth instance this year Trump delayed or cancelled tariffs as a gesture of goodwill – further exposing him to criticism that the Phase One deal exists only as a talking point.
Enacting the tariffs would cause its own problems. Republicans and Democrats alike would worry the White House was gambling with a US economy already seeing some cracks in its strength. American farmers, many in swing states, would see exports further shrink and endure deeper financial suffering – not to mention continued retaliation.
And Chinese negotiators, already frustrated with Washington doublespeak and insisting that tariffs be removed would likely walk from negotiations, says Stephen Myrow, managing partner at Beacon Policy Advisors.
"Most people around President Trump are telling him that's a big risk," Myrow, a former Treasury official, tells CNBC. "Throwing everything on right now would be a pretty big political miscalculation."
Dan DiMicco, a former steel executive who shares Trump's propensity for tariffs, and often shares trade advice with him, said Trump will win in either outcome.
"Going into this date, President Trump has a lot of latitude depending on where the talks are really at, which no one outside of him and his team know," DiMicco tells CNBC. "He really is in a no lose situation."
Since the October truce, information about the state of talks has been nearly impossible to glean. US readouts of principal-level calls stopped in early November, leaving interested parties to rely on information funneled to Chinese state media.
US officials have used phrases like "short strokes" and "millimeters away" to emphasize that a deal is in the home stretch – without indicating what, exactly, is left to negotiate of the deal that was announced as complete on Oct. 11. And President Trump has also given mixed signals about his inclination to do a deal: Within the space of one day this week, Trump suggested a deal could be more than a year away; after a 400-point market selloff, Trump revised his outlook to suggest talks were, in fact, going well.
Positive signs emerging
Business groups have leaned on their executive members to provide dispatches from the ground. Anna Ashton, the director of business advisory at the US-China Business Council, says positive signs have been emerging.
"We hear from both sides that the negotiators are close to a deal, so there is reason for optimism that we will not see new tariffs this month," Ashton says. "But as you know, they've been close to a deal before, only to have intractable differences resurface."
Officials have acknowledged the pain this particular round of tariffs could exact on the US economy. Originally set to go into effect Sept. 1, White House officials urged Trump to delay them to limit the economic impact going into the Christmas season.
The list includes items that were excluded from prior tariffs primarily because of a potential impact on consumers and voters. In May, Mnuchin told lawmakers that the US economy had been largely insulated from the tariffs because of this structure but acknowledged that would change if the goods in the December list were tariffed.
"The way these tariffs were designed was, the last tranche is really the consumer issue," Mnuchin told the House Financial Services Committee. "The last tranche is subject to the President's approval."