Chinese President Xi Jinping (left) with US President Donald Trump. Photo / AP
On Sunday, US President Donald Trump shattered hopes that a deal to end the trade war with China was imminent, complaining that the negotiations were moving too slowly and most importantly threatening to raise tariffs on Chinese imports as early as Friday.
Trump's tweets were followed on Monday by statements from Robert Lighthizer, the US trade representative, and Steven Mnuchin, the US Treasury secretary, accusing China of retreating on its commitments, further inflaming the talks.
But Liu He, China's vice-premier, is still expected in Washington for further negotiations on Thursday and Friday, in what could be the biggest showdown yet in the effort to settle the dispute.
Here is a list of the key moments in the talks, since Trump and President Xi Jinping launched the negotiations back in December.
December 1, 2018: It all began with a steak dinner at the Park Hyatt in Buenos Aires, when Trump and Xi agreed to set aside months of tariff warfare and seek a resolution to the conflict, which was harming growth and unsettling markets on both sides of the Pacific Ocean.
On Air Force One that night, as he flew back to Washington, Trump said an "incredible" deal was in store, with a myriad of Chinese concessions to come. He put Lighthizer in charge of the peace negotiations after Steven Mnuchin, the Treasury secretary, and Wilbur Ross, the commerce secretary, failed in their attempts to settle the trade dispute.
December 6, 2018: By the end of the first week, the prospects for an agreement were already dimming amid chaos and misunderstanding. Markets balked as Chinese accounts of what had been agreed in Argentina diverged from those offered by the American side, suggesting a wide gap in perceptions about the scope of the negotiations.
Complicating things further, a bombshell was thrown into the talks after it emerged that Meng Wanzhou, the chief financial officer of Huawei, the Chinese telecommunications equipment maker, had been detained on a US extradition request at Vancouver airport.
January 7, 2019: After the initial mis-steps, it took more than a month since Buenos Aires for the US and China to be in a position to launch face-to-face negotiations. Lighthizer dispatched Jeff Gerrish, his deputy, to Beijing, along with a broader delegation of US officials to begin tackling the nitty-gritty details of what a deal could look like.
Both sides sought to dismiss Ms Meng's detention as a separate law enforcement matter — evidence that Xi and Trump wanted to plough ahead with an agreement. Progress had been limited, but at least the negotiations had gotten off the ground.
January 31, 2019: Liu travelled to Washington at the end of the month, with a letter from Xi in hand that earned him an Oval Office meeting with Trump, and seemed to capture the positive spirit of the talks. "I feel that we have known each other for a long time, ever since we first met. I cherish the good working relations and personal friendship with you. I enjoy our meetings and phone calls in which we could talk about anything," Xi wrote.
The US president called it a "beautiful letter" and said "tremendous progress" had already been made. As well as the letter, Liu had brought a pledge for China to buy more soyabeans to Washington.
February 22, 2019: The next time Liu came to Washington, the atmosphere in the talks got testy. Larry Kudlow, the director of the National Economic Council, said that Lighthizer read Liu the "riot act" over China's unwillingness to budge on key issues, before Beijing softened its positions a little to extend the negotiations.
Within the Trump administration, too, tempers frayed. With cameras rolling in the Oval Office, Trump chastised Lighthizer for calling the deal a "memorandum of understanding" — saying such documents "didn't mean anything".
Lighthizer caved in as Liu chuckled in the background. "We'll never use the term again," Lighthizer said.
Earlier, Trump had publicly piled more pressure on his USTR to reach an agreement. "We've had very good talks. As you know, Lighthizer has done a great job. But it's only a great job, Bob, if you get it finished, right?," Trump said.
February 24, 2019: Originally, Trump and Xi had given themselves three months from the Buenos Aires summit to flesh out their peace plan, before a new escalation of tariffs was due to kick in on the night of March 1.
Without a deal, levies on US$200 billion ($204b) of Chinese goods were set to rise from 10 per cent to 25 per cent. But by the end of Liu's February visit to Washington, which was extended by a few days to give the negotiators more time to talk, it was clear that this timeline was too tight. In a series of Sunday evening tweets, Trump indefinitely postponed the tariff hikes.
"I am pleased to report that the US has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues," Trump said.
"Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!"
March 12, 2019: The sense of urgency in the talks dissolved after the threat of higher tariffs receded, and the reality of turning general understandings into a polished legal text meant the number of sticking points ballooned.
In both capitals, hawks arguing against a deal became more vocal in arguing against a premature settlement.
Speaking before the Senate finance committee, Lighthizer himself was blunt in saying that "major issues" were unresolved and he could not "predict success at this point". The chill in the talks continued as Trump warned that tariffs could remain in place even after a deal was struck, apparently refuting China's main demand, which is the swift removal of levies on its imports.
At the heart of US frustrations was a sense that China was already retreating on some of its pledges, or not offering enough.
April 4, 2019: After another visit to Beijing by Lighthizer, in which China's unwillingness to budge on opening up its market to US technology firms became a big source of friction, Liu was back in Washington in April to make a new attempt at closing a deal.
Despite intense speculation that a signing summit between Trump and Xi was imminent, an agreement was delayed until May at the earliest, which set the stage for this week's new round of negotiations.
"We are rounding the turn. We'll see what happens. We have a ways to go, but not very far," Trump said. "This is an epic deal, historic, if it happens," the president said. "It's the granddaddy of them all".
Trump crushed the positive mood that had buoyed talks for weeks with a pair of tweets on Sunday, after Lighthizer and his team briefed the president on what US officials described as Chinese backtracking on their pledges.
Suddenly, Trump — a self-described "tariff man" — was threatening to raise levies on US$200b of Chinese imports from 10 per cent to 25 per cent by the week's end, and he also revived a promise to impose 25 per cent levies on all remaining Chinese imports, worth an extra US$325b, if China failed to make the concessions he demanded.
The move triggered fears that the talks could collapse entirely. China reacted coolly, however, and decided against cancelling Liu's trip to Washington, which begins on Thursday, leaving a glimmer of hope that a deal could still be in store.
- Additional reporting by Lucy Hornby.
Written by: James Politi
© Financial Times
Volumes were lighter as investors are thinking more about the summer holidays.