NOEL KING, HOST:
President Trump is at the G-20 summit in Osaka, Japan, this week. And on Saturday, he'll have a crucial meeting with China's president, Xi Jinping. Those two men are trying to negotiate a truce on trade after this trade war that's stretched on for about a year. With me now is Clete Willems. In April, he stepped down as deputy director at the National Economic Council. There, he was the lead trade negotiator for the U.S. at summits, including the G-20. He's now a partner at the law firm Akin Gump.
Thanks for coming in.
CLETE WILLEMS: Thank you.
KING: All right. So let's get people up to speed. This week, Treasury Secretary Steven Mnuchin said the U.S. was, quote, "90% of the way there" on reaching a deal with China. We have certainly heard that before. You were the guy who did these deals. Is this meeting at the G-20 actually likely to close a deal?
WILLEMS: I don't think it's going to close a deal. I think the most likely outcome that you're going to have is that the leaders are going to agree to restart talks...
KING: OK.
WILLEMS: ...To try to get back to where they were in May before things broke down and probably for some indefinite period of time to agree to refrain from further escalation. But I do want to stress that is far from a done deal, and it's really going to depend on how these leaders interact with each other and the meeting that they've got tomorrow.
KING: OK. That's really interesting because President Trump has said if a deal can't be reached, he's going to put more tariffs on. You're saying what might happen is he just holds off on that.
WILLEMS: I think if the meeting goes well that he's going to be willing to hold off. However, if the meeting goes poorly, I think he's made clear that he would be willing to further escalate this, and 10% tariffs is what he's signaled.
KING: And is the threat of tariffs likely to be weighing on President Xi's mind as they go into this meeting? What's he thinking?
WILLEMS: Yeah, absolutely. I think that what the U.S. has done here is they've tried to create leverage with China. The problems that President Trump is raising with President Xi - forced technology transfer, IP theft - these are things that the U.S. has been concerned about for a long time. And the problem had been that we had negotiated these issues with China, and then China didn't follow through. And so President Trump's view is that we needed to find a way to have additional leverage over China. And he's done it with these tariffs. Now, I think what you're seeing is that President Xi is under a lot of pressure. China's economy isn't doing as well as it has been in past years. The tariffs have contributed to that. And so that is going to be weighing on his mind, and I think that creates an incentive for China to try to find a way to get out of this situation.
KING: Despite China's economic worries - and they are real - The Wall Street Journal's reporting that China's going to come to this meeting with a specific set of preconditions for a deal. They want an end to this policy implemented by the Trump administration, which bans American companies from selling technology to the Chinese firm Huawei. Do you think this administration is likely to negotiate on Huawei?
WILLEMS: Well, I mentioned before that I think what is going to be determinative here in terms of whether we restart negotiations or whether we have an escalation is going to be how those conditions are presented, how the leaders interact with each other. I think if President Xi comes into the meeting and says absolutely, unequivocally, the U.S. needs to drop tariffs - it needs to fix Huawei, and it needs to do all these other things - I think that's going to be a bad situation. If, on the other hand, President Xi says, these are my priorities - can you help me out here? Can you show me some flexibility? - I think you could have a productive meeting.
And then with Huawei in particular, that is a tricky issue. And the administration has been clear that Huawei is a national security threat and that action needs to be taken to prevent Huawei from being part of the U.S. network. Now, whether or not there's flexibility in terms of doing business with the company at all - that may be a different question. I think you theoretically, at least, can distinguish saying, they can't be part of our networks from they can't build cell phones in China, and we're not going to give them any components for their cell phones. Those are different things in my mind.
KING: The Journal also reports that the Chinese will likely ask the U.S. to drop the tariffs it's implemented so far. That likely to happen?
WILLEMS: Not in the short term. What the United States has said - and they've been clear - is that China in the past hasn't followed through on commitments it made. We need some sort of tool to check their implementation, and that's what the tariffs are going to be used for. So an immediate-term dropping of the tariffs - I don't see that. Maybe if, after some period of time, China does follow through on commitments, that's where we'll go.
KING: This meeting comes at a time when more and more American businesses are talking against the existing tariffs on China. They're saying these are really hurting us - and especially including about the proposal to impose even more. This week, NPR talked to a Florida businessman named Mark Morgan (ph). He runs a company that makes smartphone accessories. And he was telling us that the trade war with China has forced him to actually lay off workers. Let me play you that.
MARK MORGAN: We're down to six employees now. We were at 11 and then just could not support the payroll and the overhead expenses.
KING: I mean, there is really a lot at stake here. And I wonder, can the president afford, politically and economically, to hit China with tariffs again?
WILLEMS: Right. Well, I'll be the first to acknowledge that there is an impact of the tariffs on the U.S. economy. But what the president is doing here is he's trying to create a long-term situation where the unfair practices that China's engaging in that hurt those very same businesses and workers aren't going to - aren't allowed to go on anymore. And really, the question is, are we in a position economically to be able to sustain the short-term pain in order to have long-term gain of a more fair trading situation with China?
KING: Clete Williams (ph) served under President Trump as the deputy director of the National Economic Council.
Thanks so much.
WILLEMS: My pleasure. Transcript provided by NPR, Copyright NPR.