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story.lead_photo.caption In this July 12, 2018, file photo, workers pack imported lobsters at the Jingshen seafood market in Beijing. U.S.-Chinese trade contracted again in October, despite optimism about possible progress in talks aimed at ending a tariff war that threatens global economic growth. Chinese imports of U.S. goods fell 14.3% from a year earlier to $9.4 billion, customs data showed Friday, Nov. 8, 2019. (AP Photo/Andy Wong)

WASHINGTON -- President Donald Trump on Friday dismissed a Chinese official's assertion that his administration has agreed to roll back some of the higher tariffs it has imposed on Chinese goods.

The Chinese official said Thursday that the two sides had agreed to a phased cancellation of their tariff increases as part of an emerging agreement.

Trump's push-back suggested that negotiations haven't progressed as far as hoped as the world's two biggest economies struggle to negotiate an end to their trade war, which has hurt both economies.

"They'd like to have a rollback," Trump told reporters at the White House, referring to the Chinese. "I haven't agreed to anything."

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The two sides have been working on an initial " phase one" deal that was announced Oct. 12 but that still isn't final.

Financial markets in the U.S. and globally rallied Thursday at the prospect of an agreement to wind down the U.S.-China trade fight, but then fell Friday morning after Trump's comments. The Dow Jones Industrial Average managed a slight recovery and rose 6.44 points, or less than 0.1%, to close Friday at 27,681.24.

Trump repeated his claims that China wants a deal more than the United States and that the United States benefits from extra tariff revenue. The president says the tariffs are paid by China, but studies conducted since the duties were imposed find that Americans businesses and consumers are paying them.

"Frankly, they want to make a deal a lot more than I do," Trump said. "I'm very happy right now. We're taking in billions of dollars."

A private sector source with knowledge of the talks said Thursday that the United States has agreed to suspend the duties Trump threatened to impose Dec. 15 on about $160 billion of Chinese imports as part of the agreement. But there is dissension in the White House about whether and by how much to roll back 15% duties on another $112 billion of goods imposed Sept. 1.

Larry Kudlow also told Bloomberg News on Thursday that if a deal was reached, it would include reduced tariffs.

"The White House never speaks with one voice," Mary Lovely, a trade economist at the Peterson Institute for International Economics, said Thursday.

Despite Trump's comments, analysts say the administration has plenty of incentives to reach a deal soon. Trump said last month that the phase one pact would include the purchase of tens of billions of dollars of U.S. farm products by China, which would benefit farm states, many of which supported Trump in 2016.

The tariffs imposed in September covered clothes, toys, and shoes, raising prices for many widely-used consumer goods.

And the Dec. 15 tariffs would mostly hit popular consumer products such as smartphones and laptops. Not only would that raise consumer costs, but those tariffs would also affect many products designed by U.S. companies, for which China gets relatively little of the economic benefit.

"The December tariff round would largely hit products designed and marketed by multinational firms, mostly with components from the United States and its allies, and assembled in non-Chinese-owned factories," Lovely wrote on the Peterson Institute's website.

The trade war stems from the Trump administration's complaints that China is seeking to unfairly boost its high-tech industries by stealing U.S. technology or forcing American companies to share it as a condition of doing business there. Most business groups and China trade experts agree that China has violated trade rules and have largely supported the administration's tougher line.

Still, the tariffs have hurt both countries' economies. China said its growth slowed to an annual rate of 6% last month, a healthy pace for more advanced economies but China's slowest in three decades.

In the United States, businesses are dealing with the tariffs' higher costs and are uncertain about their international supply chains. They have responded by cutting their investment spending in new plants and equipment for two consecutive quarters. That's lowered U.S. economic growth to 1.9% at an annual rate in the July-September quarter from 3.1% in the first three months of this year.

A report released Wednesday by a trade group opposed to the duties found that Americans paid $7.1 billion in tariffs in September, a record high for a single month.

Once a phase one deal is reached, the two sides will still need to decide where the two leaders -- Trump and China's Xi Jinping -- will sign the pact. The leaders had initially expected to meet at an international summit in Chile this month, but the gathering was canceled because of protests in the capital, Santiago.

Reports earlier this week indicated any finalization of a first-phase agreement might slip until December and that some U.S. locations had been ruled out.

"Assuming we get it, I don't like to talk about things until they happen, but it could be Iowa or farm country or some place like that," the president said Friday. "It will be in our country, but it could be some place like that."

Robert Lighthizer, the U.S. trade representative, is pushing China to accept an enforcement mechanism that would condition tariff reductions on Chinese implementation of the agreement. Tariffs would fall -- or rise -- depending upon whether Beijing complied with specific terms, said one person familiar with the talks.

In response to the president's comments, Hu Xijin, the editor of China's nationalist Global Times newspaper, tweeted: "What's certain is that if there's no rollback of tariffs, there will be no Phase 1 deal."

Information for this article was contributed by Christopher Rugaber and Aamer Madhani of The Associated Press; by David J. Lynch of The Washington Post; and by Mario Parker and Josh Wingrove of Bloomberg News.

Business on 11/09/2019

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