Trump faces heat from Congress as China talks continue

Senior U.S. and Chinese officials on Friday dove into a second day of talks aimed at averting a possible trade war, with President Donald Trump facing increasing criticism from Congress over his plan to roll back sanctions on Chinese telecommunications giant ZTE as part of any agreement.

A Chinese foreign ministry spokesman in Beijing denied reports overnight that China had offered a package to cut the U.S. trade deficit by $200 billion annually. However, a person briefed on the discussions said the teams did discuss a plan for China to buy up to $200 billion in American goods, though the exact time frame is unclear. The talks also remain fluid, with no guarantee of success this week, he added.

Senate Minority Leader Chuck Schumer weighed in on the negotiations, urging Trump not to accept a Chinese pledge to buy American goods in exchange for dropping a threat to impose tariffs. The Trump administration has proposed penalties on between $50 billion to $150 billion in Chinese goods to pressure Beijing to do more to stop theft of U.S. intellectual property.

"Don’t let President Xi play you," Schumer wrote on Twitter. "Trading some short-term purchases of American goods and giving up on China’s theft of American intellectual property (which are our family jewels that will create millions of good paying jobs) is the art of a bad deal. Stand strong."

Trump also is facing increasing blowback from Congress over a tweet on Sunday that indicated his administration would ease criminal penalties on Chinese telecommunications giant ZTE to save Chinese jobs.

The Commerce Department in April banned ZTE from doing business with American companies for seven years after it was caught violating the terms of a record $1.19 billion penalty agreement for illegally selling U.S. telecommunications equipment to Iran and North Korea. That prompted ZTE to recently announce it was ceasing operations.

One source following the negotiations said he believes China’s main priority in this week’s negotiations is obtaining relief for ZTE, which is the country’s second biggest telecommunications company.

But in a sign of the concern in Congress over loosening the ban, the House Appropriations Committee on Thursday unanimously approved an amendment that would keep the current sanctions in place. Sen. Jeff Flake (R-Ariz.) also called it "deeply troubling" that Trump would use the ZTE penalties as a bargaining chip in negotiations.

Trump, on Thursday, defended his administration’s handling of the case, noting they had imposed both the original criminal penalties and the ban, even though the actual investigation took part during the last two years of the Obama administration.

Trump also said "anything we do with ZTE [is] just a small component of the overall deal" being negotiated with China, confirming concerns that is being used as a trade-off in the larger talks. But he argued that saving ZTE would help American jobs since the company buys so much from American suppliers.

Congress’ intense scrutiny of the issue makes it hard for Trump to deal on that point, but it might be palatable if China agrees to reforms to its highly restrictive cybersecurity regime that would make it easier for American companies to do business there, according to the source following the negotiations.

Meanwhile, in one sign of easing trade relations between the world’s two largest economies, China announced earlier on Friday that it had ended an anti-dumping and countervailing duty investigation on imports of U.S. sorghum, which is used mainly for animal feed. China said it determined the tariffs were not in the public interest and would increase costs for consumers.

U.S. grain producers heaved a sigh of relief, although China still has retaliatory duties on many U.S. agricultural products in response to duties that Trump imposed on Chinese steel and aluminum. In addition, Beijing has threatened to impose duties on an additional $50 billion worth of U.S. agricultural, chemical and other goods if Trump follow through on his plan to hit China with new duties because of intellectual property theft.

"U.S. sorghum exports to China are mutually beneficial, and we are grateful [China’s Commerce Ministry] looked at the facts of the matter and decided to restore this trade," Tom Sleight, president and CEO of the U.S. Grains Council said in a statement. "Today’s development is also a step in the right direction for U.S.-China trade relations, and we hope it is a platform for further lessening of tensions and challenges facing U.S. grains exports to China."

Andrew Restuccia contributed to this report.

The original story can be found here.