Huawei lifeline shows Donald Trump prefers business deals over cold war

In recent weeks, President Donald Trump has drawn the ire of security hawks in Congress for suggesting he could trade away his blacklisting of Huawei Technologies Co. to secure a trade deal with China.

On Saturday he took a big step toward doing just that, signaling that he cares more about selling U.S. products to China than embarking on a clash of civilizations advocated by some top advisers. In the long run, those business instincts may say more about where U.S.-China ties are headed than his deal with President Xi Jinping to suspend any new tariffs and resume trade talks.

Trump’s move last month to cut off supplies to Huawei, one of China’s most celebrated companies, marked a major escalation in his confrontation with Beijing after he raised tariffs following a collapse in trade talks. Putting the company on a Commerce Department “entity list’’ normally reserved for rogue regimes and affiliated businesses was seen as the latest sign the U.S. and China were tumbling into a new technological cold war.

That clash between the world’s biggest economies still may happen, and is viewed as inevitable by many in Beijing and Washington. But Trump on Saturday sounded much more optimistic about the future, even appearing to rebut the notion in his administration -- repeated two days ago by acting Defense Secretary Mark T. Esper -- that China is a long-term strategic competitor.

“I think we’re going to be strategic partners,” Trump said when asked by a Chinese journalist how he viewed China. “I think we can help each other,” he added. “If the right deal is structured we can be great for each other.’’

Trump announced on Saturday that he was holding fire on his threat to add new duties to a further $300 billion in imports from China, which has led to a public revolt by U.S. businesses making everything from video game consoles to tennis balls. He said his concern for now was helping out U.S. companies who have lobbied against the Huawei blacklisting.

“I like our companies selling things to other people,” Trump said.

His remarks in a freewheeling 73-minute press briefing in Osaka recalled his landmark summit with North Korean leader Kim Jong Un last year in Singapore. At that time, Trump backed away from his threats of “fire and fury” that stoked worries of nuclear war and instead spoke about North Korea’s economic potential -- even touting its potential for great real estate deals.

Still, like his North Korea strategy, Trump’s remarks on China left plenty of unanswered questions.

Trump said he would decide in the coming days whether to actually remove Huawei from the Commerce blacklist, adding that he was “talking about equipment where there’s no great national security problem.” He also said China had committed to resume purchases of farm and other products from the U.S. as part of the truce to relaunch negotiations, but offered few details.

Even when talks might resume -- or how long he would allow them to continue -- remained a mystery. As was the question of whether China would address American complaints it had reneged on a wide range of commitments, the reason U.S. officials gave for cutting off talks in early May.
 

“This doesn’t mean that there is going to be a deal,’’ Trump told reporters of the agreement to resume discussions. “But they would like to make a deal, I can tell you that.’’

China reacted to Trump’s comments with cautious optimism, indicative of a government that got burned last year for prematurely celebrating the end of trade tensions. “We will of course welcome this if those words are put into action,” Chinese diplomat Wang Xiaolong said at a briefing at the G-20 when asked about Huawei.

Huawei was more positive on its verified Twitter account: “U-turn? Donald Trump suggests he would allow #Huawei to once again purchase U.S. technology!”

The reaction in Washington was less positive. Senate Democratic leader Chuck Schumer said backing off Huawei would “dramatically undercut” the U.S.’s ability to change China’s trade practices, while Republican Senator Marco Rubio said on Twitter he would introduce legislation to reimpose sanctions on the company if Trump bargains them away.

“And it will pass with a large veto proof majority,” he said.

Beyond the Huawei move, nothing that happened in Osaka indicated the U.S. and China were near a resolution on a growing list of grievances, according to Scott Kennedy, a China expert at the Center for Strategic and International Studies.

“This is candy for markets but it doesn’t really get us closer to resolving our deep differences,’’ he said.

And despite the olive branch to China, Trump still has plenty of leverage over Beijing and Huawei. The administration has an executive order in place banning U.S. purchases of Chinese telecommunications gear, and has moved to restrict China’s access to American technology in areas such as artificial intelligence and robotics.

Trump also kept in place the import taxes he raised to new heights in recent weeks. Since the talks broke down May 10, the two sides have imposed a fresh wave of tariffs on each other affecting more than half the merchandise trade between the two countries.

“An agreement that retains most of the tariffs and simply restarts talks is one thing,” said Chad Bown, who served on President Barack Obama’s council of economic advisers and is now at the Peterson Institute for International Economics. “But a deal that removes the bulk of the tariffs now covering $360 billion of trade and gets China on the path to reforming its economy? That has been made much, much tougher by Trump’s own escalation of tensions over the last two months.”

‘Big Concession’

China hawks close to the Trump administration quietly say Trump has recently done more to threaten China’s hold on manufacturing and tech supply chains than any prior president. Slowly, they argue, Trump is raising the heat on China and ending decades of unnecessarily pliant behavior by American presidents in the face of a rising rival.

Others close to the administration insist Trump is more a pragmatist than ideologue when it comes to China. That will eventually lead to a deal, they insist, because it’s in Trump’s political interest: Peace will sell better at the 2020 polls than a grinding economic war.

Trump’s move Saturday to concede ground on Huawei adds to the evidence he’d rather cut deals than start wars.

“This is a big concession to China,” said Wendy Cutler, a veteran U.S. trade negotiator now at the Asia Society. “And it is unclear what the U.S. got in return.”