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“Trump team weighs surprise tariff cut in hopes of securing China trade deal.”  Last night’s Washington Post article led with:

The Trump administration is considering eliminating tariffs on billions of dollars of Chinese imports to spur progress toward a trade deal, less than two weeks before a high-level delegation from Beijing is scheduled to arrive in Washington for talks.

Treasury Secretary Steven Mnuchin in recent weeks has proposed a tariff reduction as an incentive for China to sweeten its offer to the United States, according to two people familiar with the discussions who were not authorized to speak publicly.

Administration hard-liners, including U.S. Trade Representative Robert E. Lighthizer, are opposed to eliminating the tariffs before China has taken irreversible steps to meet U.S. demands.

President Trump last year imposed tariffs on Chinese industrial and consumer goods as leverage in talks aimed at shrinking the U.S. trade deficit and forcing China to abandon discriminatory trading practices.

If negotiations do not succeed by March 1, tariffs on $200 billion in Chinese products are scheduled to rise to 25 percent from 10 percent. Officials now are debating whether to instead eliminate the levies on some or all of the affected Chinese goods.

More in yesterday’s Wall Street Journal article.

Divisions within the Administration are a concern, but, somehow, I expect the March 2 tariff increase to be averted.

Russia sanctions: House disapproval resolution passed overwhelmingly, but the Senate won’t take it up.  At 12:40 PM yesterday, the House voted 362-53 in favor of H.J.Res.30 to disapprove of Treasury’s decision to to lift sanctions on three Russian corporations, EN+, Rusal, and ESE, press release.  Last Wednesday, the Senate fell three votes short of ending debate on S.J.Res.2, Senate Minority Leader Chuck Schumer’s (D-NY) disapproval resolution, ending the possibility of overturning the Treasury action.

“Trump may see North Korean official in D.C. about next summit.”  Yesterday’s Politico article led with:

A top North Korean official is headed to Washington with plans to meet President Donald Trump and discuss arranging a second summit between the president and North Korean leader Kim Jong Un.

The official, Kim Yong-chol, is one of North Korea’s top negotiators and a close aide to his country’s dictator. His visit comes as U.S. attempts to persuade North Korea to abandon its nuclear weapons program have stalled, despite vague promises made during the first summit.

Kim was flying to the United States from China, a person familiar with the situation confirmed to POLITICO on Thursday. He’s expected to meet with Secretary of State Mike Pompeo on Friday. It was not immediately clear when the negotiator would see Trump, but media reports say the North Korean government has demanded that he have a session with the U.S. president.

The North Korean official is also reported to be carrying a letter from Kim Jong Un for Trump. The two leaders have exchanged letters in the past.

U.S. officials have been considering locations for a potential second summit between Kim Jong Un and Trump. Vietnam is reportedly considered a strong possibility.

President Trump’s schedule (EST):

12:45 PM:  Meets with Secretary of Treasury Mnuchin.

Shutdown: Vice President Pence and White House Adviser Kushner met with Senate Majority Leader Mitch McConnell last night.  I presume this meeting was about trying to find a way out of the shutdown.  Senator McConnell (R-KY) is not about to stick his neck out again on reopening the government without a clear public statement from the President.  I’ll be watching this morning to see if Mr. McConnell has anything to say on the matter when the Senate reopens at 10 AM.  The House is on recess until next Tuesday.

Political Insider

About Pete Davis

Pete Davis

Pete Davis advises Wall Street money managers on Washington, DC policy developments that affect the financial markets. Visit his website here daviscapitalinvestmentideas.yolasite.com.

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