So What’s It Gonna Be In U.S.-China Trade Talks? Historic Agreement? Middling Deal? Failure?

The Trump administration isn’t making it any easier to handicap the results of the U.S.-China trade talks.

Yesterday U.S. trade representative Robert Lighthizer tried to walk back expectations for the talks. There’s not even an agreement on a Memorandum of Understanding on currency. The White House has asked that China pledge not to devalue its currency to offset the effects of any U.S. tariffs. Last week it sounded like the two sides had worked something out on the issue. Not so, Lighthizer said in testimony to the House Ways and Means Committee.“Is there an agreement?” Lighthizer said. “There’s no agreement on anything until there’s agreement on everything.”

Which was clear enough until White House economic advisor Larry Kudlow said today that the talks were heading toward a historic deal. After a rocky initial two days, the talks have made a lot of progress. Kudlow said he expected a meeting at Mar-a-lago in March between President Trump and Chinese President Xi Jinping. My inclination is to give Lighthizer’s characterization of the talks more credence since he’s the one actually in the room with the Chinese negotiators. But Lighthizer is a hawk on China trade and there’s certainly a possibility that he would like to see these talks fail rathe than result in a wishy-washy compromise that headed off a confrontation but that left the Chinese economic system “unreformed.”

I’d characterize Kudlow as more of an administration cheerleader at this point but that doesn’t mean I discount his “cheers.”  He speaks for those in the administration who want to see a China deal that they could portray as a victory–especially in the aftermath of the breakdown of talks between the United States and North Korea.

As always, the key player is President Trump and as always it’s hard to figure out where he will come down among these alternatives.