(Bloomberg) -- The White House is looking at rolling out a previously agreed currency pact with China as part of an early harvest deal that could also see a tariff increase next week suspended, according to people familiar with the discussions.
The currency accord -- which the U.S. said had been agreed to earlier this year before trade talks broke down -- would be part of what the White House considers to be a first-phase agreement with Beijing. It would be followed by more negotiations on core issues like intellectual property and forced technology transfers, the people said.
The internal deliberations come as a team of Chinese negotiators, led by Vice Premier Liu He, arrived in Washington to resume trade talks with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin starting Thursday. It’s the first face-to-face talks between senior officials since July.
The offshore yuan rose more than 0.3%, erasing an earlier loss. U.S. stock futures whipsawed Thursday morning in Asia amid uncertainty about the outcome of the negotiations.
The discussions around an interim deal come as the Trump administration this week further ramped up pressure on Beijing by blacklisting Chinese technology firms over their alleged role in oppression in the far west region of Xinjiang, as well as placed visa bans on officials linked to the mass detention of Muslims. At the same time, a fight over free speech between China and the NBA, triggered by a tweet backing Hong Kong’s protesters, has underscored the heated tensions.
The window for such an agreement is closing before the U.S. plans to raise duties to 30% from 25% on about $250 billion of Chinese imports on Oct. 15. Additional duties are set to take effect Dec. 15.
A Chinese official said Wednesday the country was still open to reaching a partial trade deal with the U.S. that may include large purchases of American commodities, but added that success was contingent on President Donald Trump halting further tariffs. Showing progress with a currency pact and other matters this week could serve as a reason to delay next week’s tariff hike. Bloomberg News last month reported the White House was discussing plans for an interim deal.
Still, Trump this week said he preferred a complete trade agreement with China. “My inclination is to get a big deal. We’ve come this far. But I think that we’ll just have to see what happens. I would much prefer a big deal. And I think that’s what we’re shooting for,” he said.
A White House spokesman declined to comment. A Treasury spokesman didn’t respond to a request for comment. China’s Ministry of Commerce did not immediately respond to fax about the high-level talks.
Manipulation Label
No details were made public about the U.S.-China currency pact reached in February that Mnuchin at the time called the “strongest” ever. Broader trade negotiations between the two countries broke down in May after the U.S. accused China of backtracking on its commitments. Then, in August, the Trump administration formally declared China a currency manipulator.
According to people familiar with the currency language, the pact largely resembles what the U.S. agreed to in a new trade agreement with Mexico and Canada and also incorporates transparency commitments included in Group of 20 statements.
Still, Lighthizer cautioned earlier this year that the currency agreement hinges on the overall enforcement of the trade deal. “There’s no agreement on anything until there’s agreement on everything. But the reality is we have spent a lot of time on currency, and it’ll be enforceable,” he said in congressional testimony on Feb. 27.
The senior negotiators from the U.S. and China are scheduled to hold talks through Friday, people familiar with the plans said. Liu met with a small group of business executives and separately with International Monetary Fund officials Wednesday afternoon, people familiar with the meetings said.
(Updates with markets in fourth paragraph.)
