Call Me Maybe? Conflicting Views Show Gap Between U.S. and China

WASHINGTON — The trade conflict between the United States and China has become so caustic that the two countries cannot even agree if they are talking.

President Trump jolted markets and left world leaders scratching their heads on Monday when he said at the Group of 7 summit in France that senior Chinese officials had phoned his advisers over the weekend to engage in trade negotiations. The alleged overtures would have come hours after Mr. Trump raised tariffs on Chinese imports and labeled President Xi Jinping an “enemy” of America in a tweet.

China said the calls never happened.

The back and forth capped a whiplash-inducing 72 hours in the trade war as Mr. Trump alternately suggested he was doubling down in his fight against China while offering hope that trade negotiations were continuing.

It also left Mr. Trump’s top economic aides straining to back up the president without contradicting him. Pressed about the calls on Monday before a meeting with Prime Minister Narendra Modi of India, Mr. Trump said that Liu He, China’s vice premier, had reached out to his team. The president called on Treasury Secretary Steven Mnuchin, who was sitting next to him, to verify the call.

Choosing his words carefully, Mr. Mnuchin pointed to a public statement that Mr. Liu had made at a conference in China on Monday, when he called for calm negotiations, and said, “We’ve been communicating through intermediaries back and forth with him.”

Mr. Mnuchin later added that “there has been communication going on” but would not comment on any phone calls.

Press officers for the Treasury Department and the Office of the United States Trade Representative, who usually confirm such calls, did not respond to requests for comment or clarification.

On Tuesday, a spokesman for the Chinese Foreign Ministry, Geng Shuang, said he still knew nothing of the conversations.

“I have not heard of this situation regarding the two calls that the U.S. mentioned in the weekend,” he said during a news conference.

Mr. Trump has a long history of citing telephone overtures from unnamed callers to buttress an argument or generate a sense of support for something he is trying to accomplish.

When Mr. Trump faced criticism for espousing anti-Muslim policies during the 2016 presidential campaign, he said on Fox News that “I get calls from many people thanking me, who are Muslim.” As recently as last month, when Mr. Trump decided to insert himself in the effort to get the rapper ASAP Rocky released from police custody in Sweden, he said he was responding to calls from African-Americans.

“Many, many members of the African-American community have called me — friends of mine — and said, ‘Could you help?’” he said.

The confusion over the China calls left commentators in the United States and China grasping for answers about whether one side was lying or if something was lost in translation.

Hu Xijin, the editor of China’s Global Times publication, suggested that conversations between low-level officials in both countries were being overblown by Mr. Trump.

“Based on what I know, Chinese and US top negotiators didn’t hold phone talks in recent days,” he said on Twitter. “The two sides have been keeping contact at technical level, it doesn’t have significance that President Trump suggested.”

Jim Cramer, the CNBC television host, said it did not matter if Mr. Trump was being honest about the phone calls because the president suggested he wanted talks with China to continue.

“Everyone is so focused on whether he’s lying, they’re not even listening to what he’s saying,” Mr. Cramer said. “What he’s saying is, ‘Hey, I’ll deal.’ People are so obtuse.”

It is possible that Mr. Trump was trying to give a lift to markets this week after stocks plunged on Friday amid news that China and the United States were both ratcheting up tariffs. The Dow Jones industrial average and the S&P 500 both climbed by more than 1 percent on Monday, and analysts attributed part of the rise to positive trade comments.

But some analysts said the relatively modest uptick showed that investors were not going to be mollified by Mr. Trump’s offhand statements given how quickly his views tend to shift.

For instance, Mr. Trump said on Sunday that he had second thoughts about escalating the trade dispute with China, only to have the White House press secretary release a statement hours later claiming that he had regrets only about not raising tariffs higher.

“It’s absurd to think that senior Chinese officials would call, looking to restart high-level talks, just two days after Mr. Trump raised tariffs on Chinese imports yet again, and then expressed regret that he had not raised them further,” Ian Shepherdson, the chief economist at Pantheon Macroeconomics, wrote in a note to clients on Tuesday.

Henrietta Treyz, the director of economic policy research at Veda Partners, said on Tuesday that major investors tuned out Mr. Trump’s comments about telephone calls because they assumed that the two sides were in continuous dialogue to end the trade war.

They are paying less attention to remarks that lack specificity from American officials, she said, because Mr. Trump, Mr. Mnuchin and Larry Kudlow, the director of the National Economic Council, have made many comments that turned out not to be true, including China’s agreement to buy more farm products.

Mr. Mnuchin and Mr. Kudlow are “having much less effect on pumping the market as they used to, and Trump as well,” Ms. Treyz said.

Still, Ms. Treyz said that it was impossible for investors to ignore the president and that the volatility of his policy moves was unsettling markets.

“It makes short-term investing a nightmare and long-term investment draining,” she said.

The volatility is unlikely to stabilize anytime soon. Mr. Trump made clear this week that he views his ability to sow instability as a feature rather than a bug.

“It’s the way I negotiate,” Mr. Trump said at his closing Group of 7 news conference. “It’s done very well for me over the years, and it’s doing even better for the country.”



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