Chances of trade deal with China fade, at least until after elections; U.S. looks elsewhere for leverage

The prospect of resolving the U.S. trade battle with China is fading as the White House draws closer to a deal to revise the North American Free Trade Agreement," Bob Davis and Lingling Wei report for The Wall Street Journal: "The outcomes are related, U.S. officials say. Relaxing trade tensions with Mexico and Canada, plus a preliminary trade agreement with the European Union, have made it easier to forge a multilateral front to oppose Chinese trade practices. The U.S., the E.U. and Japan have already held meetings on such a strategy."

Friendlier relations with trade allies could come in handy as the U.S. prepares to hit China with 25 percent tariffs on $200 billion in goods, since those allies would be less likely to allow Chinese exporters to get around U.S. tariffs by shipping goods through a third country. 

So what happens next? Some trade associations are considering suing U.S. Trade Representative Robert Lighthizer to stop the tariffs, on the grounds that the administration has acted arbitrarily and exceeded its authority in issuing the tariffs. Meanwhile, Chinese officials are trying to buy time, reassuring nervous stock market investors that talks with the U.S. are proceeding.

Lighthizer "has been pressing for deep changes in the Chinese economy, including reduction of subsidies and other industrial policies favoring domestic firms, the Journal reports. Earlier negotiations had focused more on boosting Chinese imports of U.S. goods. . . . But structural changes are the toughest for China to meet."

An unnamed Chinese economic-policy advisor told the Journal that China can afford to be patient until the Nov. 6 elections, in which tariffs could figure. "That would leave very little time to conclude a deal in November, before the G-20 summit," Davis and Wei report. "Chinese officials believe that if Republicans fare poorly in the elections, the president will be weakened in talks with China."  

The U.S. and China could negotiate at the Asia-Pacific Economic Cooperation summit in November, but President Trump plans to skip it. If bilateral talks until then bear no fruit, that leaves only the G-20 conference later in November to reach a deal, the Journal reports.