Top White House economic adviser Larry Kudlow on Tuesday called U.S. trade negotiations with China “pretty far advanced” and said the issues under discussions between the two countries are broader than in prior conversations, yet also cautioned that the outcome is in doubt.
“We’ve come further and the table of contents is larger than anything we’ve seen before,” he told attendees at a conference hosted by the Wall Street Journal.
But Kudlow struck a cautious tone when asked about the potential outcome of talks around long-standing issues like China’s theft of intellectual property and forced technology transfers, acknowledging that a deal “may not get done.”
“I have no assurances,” he said.
Trump and Chinese President Xi Jinping agreed to a 90-day trade detente during the G-20 summit in Argentina last weekend. On top of a commitment to purchase agriculture and industrial products from the U.S., Trump also announced on Sunday that China will remove an additional 25 percent tariff on American car imports, a pledge that Kudlow called a “litmus test.”
[Related: Wall Street surges after Trump’s temporary trade truce with China]
Xi has yet to confirm that China will reduce the levies, imposed as trade tensions between the two countries grew more contentious, but “Trump believes they will,” Kudlow said.
“We’ll see, China has its own communications,” he said.
Should no broader trade deal be reached in roughly the next three months, Kudlow said the White House is prepared to advance new tariffs on $267 billion in Chinese goods and hike the existing tariffs on $200 billion in products from 10 percent to 25 percent.
But Kudlow also acknowledged that it is not realistic to expect major reforms from China within 90 days. “Much as I would like them to adopt a Kudlowian supply-side free market model … I’m not sure we’d get there in 90 days with China,” Kudlow said. “But I think on specific matters we can move the ball.”
