Trump Says Phase 2 China Trade Deal Unlikely at This Point

Trump speaks to members of the media on the South Lawn before boarding Marine One en route to Florida on July 10.
Trump speaks to members of the media on the South Lawn before boarding Marine One en route to virus-stricken Florida on July 10. (Shawn Thew/Bloomberg News)

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President Donald Trump said a phase two trade deal with China isn’t under consideration, saying the relationship between Washington and Beijing has deteriorated too much.

“I don’t think about that,” Trump said July 10 when asked about the possibility of a second round of trade agreements with China. “The relationship with China has been severely damaged.”

Trump’s comments — made to reporters aboard Air Force One on his way to Florida for a fundraiser and a visit to a military base — reflect the steady breakdown of ties between the two nations over issues such as the coronavirus pandemic, trade and the competition for military supremacy in the South China Sea.


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On July 9, the U.S. sanctioned a top member of China’s ruling Communist Party and three other officials over human rights abuses against Muslim Uighurs in the western region of Xinjiang. Trump is also poised to sign legislation punishing Beijing for quelling dissent in Hong Kong as it took steps to limit the island’s autonomy.

Some top advisers to Trump want the U.S. to undermine the Hong Kong dollar’s peg to the U.S. dollar as the administration considers options to punish China for recent moves.

U.S. stocks held onto most of their advance after the news, a signal that investors may have discounted the prospects for further progress on U.S.-China trade anytime soon.

The administration plans to make an announcement next week related to China’s decision to conduct military exercises in the contested waters around the Paracel Islands, a move the U.S. has deemed “unlawful,” according to people familiar with the matter.

In the first phase of the trade deal signed Jan. 15 in Washington, China committed to revamp its intellectual-property protections and to buy some $200 billion in additional U.S. exports over two years, in return for the U.S. offering some relief on tariffs. So far, China has stuck to its plan to accelerate imports of American farm goods after talks in Hawaii.

But key issues in the trade relationship remain, like dealing with the web of industrial subsidies that have helped give Chinese companies a leg up in growing into fierce global competitors in recent decades.

The U.S. has ramped up pressure on China across many fronts in recent months, accusing it of covering up the origins of the COVID-19 pandemic and reneging on promises to guarantee political autonomy to the former British colony of Hong Kong. The election campaigns for Trump and Democratic presidential nominee Joe Biden have sought to taint each other as weak in confronting Beijing’s leaders.

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