United States and China to hold trade talks at the end of January.

On January 17, China's Ministry of Commerce confirmed Vice Premier Liu He will meet with Treasury Secretary Steven Mnuchin and United States Trade Representative Robert Lighthizer January 30-31 in Washington.   Chinese Vice Minister for Commerce Wang Shouwen and Vice Minister for Finance Liao Min are reportedly planning to visit Washington, D.C. the week before to prepare for the Liu-Lighthizer-Mnuchin meetings.

Also on January 17, the Wall Street Journal reported that Secretary Mnuchin has floated lifting tariffs on China in hopes of enticing Chinese officials to make a broader and more ambitious deal.  The previous day, January 16, Vice President Mike Pence indicated little progress had been made in U.S.-China trade talks; Senate Finance Chairman Chuck Grassley (R-IA) also revealed that Ambassador Lighthizer had told him that not much progress had been made.  According to other media reports, the two sides have not produced the draft text for any deal yet.     

President Trump is reportedly still deciding whether to continue his tariff pressure on China or to support concessions intended to support U.S. financial markets and avoid a recession before his 2020 re-election campaign.  On January 14, Trump told a farmers’ convention in New Orleans that a deal may be possible.  The President also said that China is having “a very hard time because of the tariffs,” and badly want a deal.

The high-level meeting with Liu He in Washington will come just one month before the March 1 deadline President Trump set for China to address the Administration’s Section 301 complaint regarding forced technology transfer, IPR violations, non-tariff barriers, and cyber theft, otherwise the tariffs on $200 billion worth of Chinese imports will increase from 10 to 25 percent, and the remaining $250 billion in Chinese exports could be subjected to penalty tariffs.

Ambassador Lighthizer is also reportedly prepared to consider offering U.S. businesses an exclusion process for the $200 billion tranche of 301 tariffs if there is no deal and they are increased from 10% to 25%.  On January 11, Lighthizer told Senator Tim Kaine (D-VA), that USTR will implement an “appropriate” product exclusion process for U.S. businesses whose products are covered by the 25 percent tariffs if a deal is not reached by March 2.