The U.S. negotiating team sent to China to help resolve escalating trade tensions returned home late last week without releasing a statement and without a deal. Various reports, including Keith Bradsher from Beijing for the NY Times, noted that both sides laid out ambitious demands in the first round of talks.

          The U.S. demands of China (according to the NYT):

          • Cut its trade surplus by $100 billion in the 12 months starting in June, followed by another $100 billion in the following 12 months.
          • Halt all subsidies to advanced manufacturing industries in its so-called Made In China 2025 program. The program covers 10 sectors, including aircraft manufacturing, electric cars, robotics, computer microchips and artificial intelligence.
          • Accept that the United States may restrict imports from the industries under Made in China 2025.
          • Take “immediate, verifiable steps” to halt cyberespionage into commercial networks in the United States.
          • Strengthen intellectual property protections.
          • Accept United States restrictions on Chinese investments in sensitive technologies without retaliating.
          • Cut its tariffs, which currently average 10 percent, to the same level as in the United States, where they average 3.5 percent for all “noncritical sectors.”
          • Open up its services and agricultural sectors to full American competition.
          • The United States also stipulated that the two sides should meet every quarter to review progress.

          China’s demands of the U.S. (according to the FT):

          • The U.S. must drop its opposition to China being treated as a market economy in the World Trade Organization, and threatened to retaliate by treating the U.S. as a non-market economy if it did not comply.
          • The U.S. must end restrictions on US exports of sensitive high-tech products.
          • The U.S. must lift a recent ban on telecommunications maker ZTE sourcing parts in the U.S.

          Bradsher of the NYT on what might come next: One possibility that American officials have considered is whether China might send Vice President Wang Qishan, who is close to Mr. Xi, to the U.S. on a follow-up trip.


So much for waiting for 301 tariffs to go into effect: The big breaking stories of the week focused on steps China is already taking to limit U.S. access to their market in retaliation for steel and aluminum tariffs and the threat of 301 tariffs.

Soy: Bloomberg reported on Wednesday that a top U.S. soy producer is saying that China has stopped buying U.S. soy:

“Whatever they’re buying is non-U.S.,” Bunge Ltd. Chief Executive Officer Soren Schroder said in a telephone interview Wednesday. “They’re buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the U.S.”

More from the WSJ on the dramatic soy drop-off (numbers from USDA): “Chinese buyers ordered about 255,000 metric tons of U.S. soybeans during the week ending April 5, according to the USDA, but new sales over the rest of the month came to about 11,000 metric tons, a sharp decline. Meanwhile, purchasers canceled nearly 76,000 metric tons’ worth of orders over the month.”

• The Wall Street Journal story also notes that corn and pork orders have been cut back or canceled. In addition, Reuters reported last week that Chinese customs officials are stepping up fruit inspections on U.S. imports, creating costly delays.

The takeaway: One long time trade official last week called the Chinese strategy “death by a thousand cuts.” Look for the already perturbed agricultural sector to ramp up concerns in the coming weeks.


An editorial in the Wall Street Journal last week took U.S. Trade Representative Robert Lighthizer to task for, among other things, making hard-line demands on dispute settlement and auto rules of origin, delaying NAFTA talks until he returned from China, and relying on Democrats to pass NAFTA 2.0. The ed board reserved their most scathing criticism for that last point:

“Mr. Lighthizer doesn’t seem to care. He wants to present Congress with an ultimatum to approve the renegotiated agreement or watch Mr. Trump let Nafta expire. On Tuesday Mr. Lighthizer said he expects to have a deal in a week or two and predicted that Democrats will help him pass it. These are apparently the AFL-CIO-backed Democrats who couldn’t deliver a majority for trade agreements with Democrats in the White House. More likely, they’ll call Mr. Lighthizer’s bluff, let Nafta expire, and blame Mr. Trump and Republicans for the economic damage.”

About the Trade Promotion Authority timeline: Most Congressional experts are now saying it will be difficult, if not impossible, for the administration to pass NAFTA 2.0 this calendar year. Check out a helpful primer on why from Phil Levy at Forbes.


• The United States gave Canada, Mexico, and the E.U. a one-month reprieve from steel and aluminum tariffs last Tuesday, when their current exemption was set to expire. However, statements from the White House and from trade advisor Peter Navarro made clear that (1) this would be the last such extension and (2) an exemption going forward will be contingent on “quotas that will restrain imports, prevent transshipment, and protect the national security.”

• Brazil, Argentina, and Australia are all finalizing negotiations with the White House on quota agreements (Reuters reported last week that Brazil will accept a 70 percent cap), while South Korea has already agreed to a quota on steel of 70 percent of prior year exports, thus avoiding steel tariffs from the U.S. However, South Korea is still subject to the 10 percent tariff on aluminum.

• Meanwhile, the E.U. is saying that they will not accept a quota and expects an unconditional exemption from the tariffs. Trade watchers will remember that the E.U.’s previous steel and aluminum retaliation list had some politically pointed items on it including Kentucky whiskey. June 1 could be an interesting day…


• The debate around Investor-State Dispute Settlement continues to rage in NAFTA talks. According to Inside U.S. Trade, U.S. Trade Representative Robert Lighthizer “has not backed down from a proposal that would allow NAFTA countries to opt in or out of investor-state dispute settlement rules."

• However, the same report also notes “discussions among observers and stakeholders about alternative ISDS options that would offer some protection for the oil and gas industries in particular -- and might satisfy Republican lawmakers, most importantly House Ways & Means Chairman Kevin Brady.”

• Not so fast: Brady’s office put out a statement last week noting that “Chairman Brady is absolutely committed to ensuring NAFTA includes a robust ISDS, which is an indispensable enforcement tool in our trade agreements. He does not support a watered down or ‘skinny’ ISDS, which could compromise its proven effectiveness in making sure American companies and workers are treated fairly.”

• Meanwhile, four leading business groups are asking the administration to keep ISDS in the agreement.

Prepared by Matt McAlvanah ( and the Monument Trade Team

Interested in receiving Monument's Week in Trade in your inbox on Mondays? Sign up below for your weekly dose of trade insights!