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How Trump is relying on ‘chemistry’ to forge trade deal with China

President Trump is calling his agreement with Chinese President Xi Jinping “an incredible deal” that could go down as “one of the largest deals ever made.” But what exactly does it include? Nick Schifrin is joined by the Hudson Institute’s Michael Pillsbury, outside adviser to the Trump administration, to discuss who will be managing negotiations and what “monitoring” of China might be required.

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  • Amna Nawaz:

    As we reported earlier, over the weekend, President Trump said his agreement in Buenos Aires with Chinese President Xi Jinping was — quote — "an incredible deal," one that he said could go down as — quote — "one of the largest deals ever made," if it goes through.

    But, as Nick Schifrin reports, that's the big question: Just what did China agree to? And what's the likelihood of reaching a bigger deal in the next few months to eliminate tariffs?

  • Nick Schifrin:

    Amna, there were some specific agreements announced by presidents Trump. He delayed plans to raise tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent.

    And the U.S. says the Chinese promised to buy a significant amount of American products. The president and other U.S. officials have also said today China is going to remove tariffs on U.S. cars coming into the country. But China hasn't confirmed that.

    Let's look at the significance of what happened and what still needs to take place.

    Michael Pillsbury is an adviser to the Trump administration and the director of the Center for China Strategy at The Hudson Institute.

    Michael Pillsbury, thank you. And welcome back to the "NewsHour."

  • Michael Pillsbury:

    Thank you.

  • Nick Schifrin:

    Let's get to some of the core of the deal with, at least what the U.S. says.

    The U.S. says the Chinese promised to purchase more than a trillion dollar of products, I think the number was today. According to the U.S., they have agreed to address more systemic issues like intellectual property theft.

    The Chinese have made similar promises in the past, as you know. Why should this be any different?

  • Michael Pillsbury:

    I think the important thing is to see the overall approach, that it's taken a year-and-a-half of President Trump's, I hate to say threats, but his pressure on China, in various ways, to bring about this three-hour meeting.

    There's no written agreement that's come out of it, but the focus seems to be on starting formal talks with our U.S. trade representative's office. Chinese are, I wouldn't say frightened, but they're very respectful of Bob Lighthizer. So you have a sense of caution on the Chinese side. What are we getting into?

    And there's the issue of what they actually agreed to. I have some impressions from talking to the Chinese today and yesterday.

  • Nick Schifrin:

    In their statement after the dinner, the Chinese didn't mention a few things that the U.S. has said they did. The Chinese didn't mention any kind of 90-day deadline, which is what the president said.

  • Michael Pillsbury:

    That's right.

  • Nick Schifrin:

    They didn't mention any buying of agriculture products at all. So doesn't that concern you?

  • Michael Pillsbury:

    Well, there's a big difference, as you point out, between the Chinese version of what happened in their media and what various advisers of President Trump have said.

    The tradition used to be, we don't talk in public about arrangements we made with the Chinese, for a variety of reasons. One is that they may be unstable back in Beijing and not be willing to be humiliated by the American side saying, we got this victory, we got that victory.

    President Trump is taking a different approach, where he's really stressing his chemistry with President Xi. This is — I wouldn't call it a gamble, but it's a risk. Suppose President Xi really does accept what President Trump is telling him and then tells his government, fix all this for my friend. That is going to be the biggest breakthrough since 1972.

  • Nick Schifrin:

    Very quickly, Michael Pillsbury, in the time we have left, are you worried that the Chinese will have short-term actions, so these investments perhaps or purchasing that they will do, and not do the long-term systemic changes that, frankly, you and many in the administration want them to make?

  • Michael Pillsbury:

    What I think the Chinese are doing — and they're not stupid either — they have already begun announcing over the past month a series of reforms that they want to do on their own.

    One of the phrases is, we're going to open our market greater than the last 40 years. They then specified $2.5 trillion of foreign services, insurance, investment. Anything that's not a good is a service. That's a pretty big gesture.

    They have said a number of things about bringing tariffs down. They have even said that they share the American goal no tariffs and no — non-trade barriers.

    They haven't said no subsidies. That's probably a bridge too far, because their system is based on subsidies.

  • Nick Schifrin:

    But, fundamentally, you think they're serious about these long-term changes?

  • Michael Pillsbury:

    I think Ambassador Lighthizer may be doing something that happened back in the 1980s with Japan, identifying that there are reformers inside China and pushing them, helping them.

    So, the idea maybe that President Trump has, push on the system, keep Xi separate from the wrongdoing, and then try to get the reformers to change some of this egregious conduct that, frankly, the whole world knows about in China.

  • Nick Schifrin:

    Mike Pillsbury, outside adviser to the Trump administration and of The Hudson Institute, thank you very much.

  • Michael Pillsbury:

    Thank you very much.

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