Beijing and Washington agreed they would keep talking about measures under which China would import more energy and agricultural commodities from the United States to close the $335 billion annual U.S. goods and services trade deficit with China (all figures US$).

A joint statement issued at the conclusion of intensive trade talks in Washington did not indicate whether the two countries would delay or drop their tariff threats on billions of dollars worth of each country’s goods, which has sparked fears of a wider trade war and roiled financial markets.

“There was a consensus on taking effective measures to substantially reduce the United States’ trade deficit in goods with China,” the joint statement said.

“To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services.”

President Donald Trump has threatened to impose tariffs on up to $150 billion on Chinese goods to combat what his administration says is Beijing’s misappropriation of U.S. intellectual property through joint venture requirements and other policies that force technology transfers.

Beijing denies such coercion and has threatened equal retaliation, including tariffs on some of its largest U.S. imports — among them aircraft, soybeans and autos.

A report by China’s state-run Xinhua news agency described the statement from the two governments as “vowing not to launch a trade war against each other.”

While the statement said the two sides would engage at high levels and “seek to resolve their economic and trade concerns in a proactive manner,” it made no mention of tariffs.

It said there was consensus between Washington and Beijing on the need to create “favorable conditions to increase trade” in manufactured goods and services. This could be a reference to China’s previous pledges to open up more economic sectors to services.

A commentary published by Xinhua on Sunday declared the statement a “good example of win-win”, noting that it would help America reduce its trade deficit by increasing exports to China and allow China to diversify and raise the quality of its imports.

It also argued that China has always resisted any “unreasonable demands” by the U.S., never compromising or accepting restrictive conditions.

The commentary added that a resolution to the trade dispute will be complicated, difficult and take a long time.

U.S. LNG exports

The U.S. will also send a team to China to work out the details of increased agricultural and energy exports, the countries said, without specifying timing.

A senior U.S. official said that during discussions with a member of President Xi Jinping’s office, China was considering a package that relied on major purchases of U.S. liquefied natural gas, including a contract for a U.S. firm to build LNG receiving and processing facilities in China.

The package, which also would include new commitments on intellectual property protections, could be agreed by a potential mid-year visit to Washington by China’s Vice President Wang Qishan, the official said.

Trump made cutting the U.S. trade deficit with China a promise in his presidential campaign.

During an initial round of talks earlier this month in Beijing, Washington demanded that China reduce its trade surplus by $200 billion — a figure most economists say is impossible to achieve because it would require a massive change in the composition of commerce between the two countries.

As of late Thursday, U.S. officials were still pressing China to agree to that size reduction.

But economists say that level would be extremely difficult to achieve, especially as U.S. tax cuts are spurring demand for more imports.

The $200 billion figure is equivalent to about 90 per cent of Boeing’s annual aircraft production and is larger than all of the United States’ global annual agricultural and oil exports.

Eswar Prasad, a Cornell University trade professor and former head of the International Monetary Fund’s China division, said that Beijing had clearly balked at a specific quantitative commitment.

“It is a very limited and tentative agreement mainly designed to deescalate tensions,” Prasad said of the joint statement.

IP vagueness

The statement was vague on the Trump administration’s core intellectual property complaints, saying that both countries “attach paramount importance to intellectual property protections … China will advance relevant amendments to its laws and regulations, including the Patent Law.”

There are concerns among some legislators and trade experts that Trump could give priority to a narrower trade deficit over tackling what they say is China’s abuse of intellectual property rights. Any deal under which China would import more goods could easily be reversed, economists say.

The statement made no mention of whether there would be a relaxation of paralyzing restrictions on Chinese telecommunications equipment maker ZTE Corp. imposed last month by the U.S. Commerce Department.

The action, related to violation of U.S. sanctions on Iran, banned American companies from selling semiconductors and other components to ZTE, causing the Shenzhen-based company to cease operations.

Earlier this week, Trump tweeted that he directed the Commerce Department to put ZTE back in business and said the company’s situation was part of an overall trade deal with China.

— Reporting for Reuters by Ginger Gibson; additional reporting by Alexandra Harney in Shanghai.

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Farmers for Free Trade, a bipartisan group, on Tuesday said it would run ads on programs the president is known to watch — including Fox and Friends and MSNBC’s Morning Joe. The ads will first run in Washington, D.C. and then in southern Florida where Trump’s Mar-a-Lago home is located.

The ads will start this week and run for four weeks, including late March through early April when Congress is out of session and the president is more likely to visit Mar-a-Lago.

“Farmers are increasingly worried about what they are seeing from Washington D.C. on trade,” said Democratic former U.S. Senator Max Baucus of Montana, a co-founder of the Farmers for Free Trade coalition. “When the U.S. engages in a tit-for-tat fight with our trading partners, farmers pay the price.”

Trump last week signed import tariffs of 25 per cent on steel and 10 per cent on aluminum. Critics of the move, including members of his own Republican Party worry it could result in retaliatory measures.

Chinese officials have said U.S. soybeans are a prime target for retaliation against the tariffs, according to the American Soybean Association.

Farm groups hold sway with Republicans and overlap heavily with Trump’s political base. They are also pushing for the president not to exit the North American Free Trade Agreement (NAFTA).

The U.S. exported US$138 billion in agriculture commodities in 2017 — which resulted in a surplus for agriculture goods, according to the U.S. Census.

The ad depicts farmers making a direct appeal to Trump.

“The crops that we grow here on this farm are exported across the globe. Policies that restrict trade would be devastating for farms like ours,” Montana farmer Michelle Erickson-Jones says in the 30-second ad. “Someday I’d like to pass the farm down to my boys. Mr. President, protect free trade and keep our agriculture economy strong.”

While Trump has already signed off on the tariffs, they could still be subject to changes and some countries could be exempted.

When Trump was on the brink of exiting NAFTA, Agriculture Secretary Sonny Perdue was credited with convincing Trump to remain in the pact by showing him maps of agriculture-heavy areas overlapped with maps of his election results.

— Ginger Gibson is a political correspondent for Reuters in Washington, D.C.

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Talks to overhaul the North American Free Trade Agreement resume this weekend in Mexico, the second round after U.S. President Donald Trump’s renewed threats to withdraw from one of the world’s biggest trade blocs.

In one letter seen by Reuters, sent to U.S. Commerce Secretary Wilbur Ross and Trade Representative Robert Lighthizer on Thursday, retailers argue that the U.S. proposal to allow more complaints about the dumping of perishable produce would have “dangerous implications for U.S. businesses and consumers.”

The retailers and food industry groups argue that U.S. producers could be left open to retaliatory measures if more complaints were to be filed, for instance, against avocados, tomatoes and other produce imported from Mexico.

The letter was signed by large trade groups including the National Council of Chain Restaurants, National Restaurant Association, National Retail Federation, Retail Industry Leaders Association and Fresh Produce Association of the Americas.

A separate letter was sent on Wednesday by 26 U.S. agriculture groups — addressing Ross, Lighthizer, Agriculture Secretary Sonny Perdue and Gary Cohn, the top White House economic adviser. It too urged U.S. negotiators to abandon the fresh produce proposal because it risks damaging U.S. producers.

“Once seasonal tariffs were put in place for tomatoes, for example, Mexico or Canada may initiate trade cases of their own on any of a wide range of U.S. agricultural products, beginning a tit-for-tat cycle that could broadly limit agricultural trade,” the letter states. “At a time of low commodity prices in much of the United States, U.S. agriculture can hardly afford to see a primary market disrupted.”

The letter was signed by several large agriculture groups, including the U.S. Grains Council, National Association of Wheat Growers, National Cattleman’s Beef Association, National Corn Growers Association, National Cotton Council of America and Ocean Spray Cranberries.

— Ginger Gibson is a Washington, D.C. correspondent for Reuters.

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