This is the big one. This is the inflection moment. Tonight around 5:00pm Chinese Vice-Chairman Liu He will engage with team U.S.A. on the substantive issues around the future of the U.S-China trade relationship. Trillions at stake.

At midnight tonight the tariffs on Round One of Chinese goods are scheduled to increase from 10 percent to 25 percent. Round Two is yet determined. The background for the disposition of TEAM USA was outlined HERE.

Mnuchin – Trump – Lighthizer and Ross

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnunchin previously worked a 150-page outline agreement with China on seven chapters of trade issues covering: Theft of U.S. intellectual property; protection for trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation. Last week China reversed course on all of the substantive agreements.

Today Vice-Chairman Liu He is going to try to justify to President Trump why China can no longer accept the commitments they made over the past three months.

It cannot be overstated how everything in/around DC must first be filtered through the prism of this inflection point. At the heart of U.S. politics, the majority of the Senate Chamber is aligned with the Chinese through purchased multinational lobbying interests. Again, there are trillions at stake. Wall Street through K-Street has paid the Big Club to defend their multinational/financial interests from President Trump.

BEIJING (Reuters) – China appealed to the United States to meet it halfway to salvage a deal that could end their trade war, with its chief negotiator in Washington for two days of talks hoping to stave off U.S. tariff hikes set to be triggered on Friday. The two sides had appeared to be converging on a deal until last weekend, when U.S. President Donald Trump announced his intention to raise tariffs with his negotiators saying that China was backtracking on earlier commitments. “The U.S. side has given many labels recently, ‘backtracking’, ‘betraying’ etc…China sets great store on trustworthiness and keeps its promises, and this has never changed,” Commerce Ministry spokesman Gao Feng said on Thursday. […] Gao said the decision to send the delegation led by Vice Premier Liu He to Washington despite the tariff threat demonstrated China’s “utmost sincerity”. “We hope the U.S. can meet China halfway, take care of each others’ concerns, and resolve existing problems through cooperation and consultations,” he said. Gao urged the United States to eschew unilateral action, while warning China was fully prepared to defend its interests. “China’s attitude has been consistent and China will not succumb to any pressure. China has made preparations to respond to all kinds of possible outcomes.” He did not elaborate. U.S. government and private sector sources previously told Reuters that a draft trade agreement was riddled with reversals by China that undermined core U.S. demands. In each of the seven chapters of the draft, China had deleted its commitments to change laws to resolve core complaints that caused the United States to launch a trade war: Theft of U.S. intellectual property and trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation. The stripping of binding legal language from the draft struck directly at the highest priority of U.S. Trade Representative Robert Lighthizer – who views changes to Chinese laws as essential to verifying compliance after years of what U.S. officials have called empty reform promises. (read more)

President Trump also stated his willingness to levy Round-Two tariffs on an additional $325 billion of China’s goods; layered on top of the $250 billion of its products already outlined.

Since July 2018, China has cumulatively imposed counter-tariffs of up to 25 percent on about $110 billion of U.S. products. China last levied tariffs, of 5 percent to 10 percent, on $60 billion U.S. goods including liquefied natural gas and small aircraft in September ’18.

Based on 2018 U.S. Census Bureau trade data, China only has about $10 billion in U.S. imports left to levy in retaliation for further U.S. tariffs, including crude oil and large aircraft.