According to a Bloomberg report, US is asking China to shift some tariffs away from agricultural goods to other products. And China is in consideration.

The request came as Trump didn’t want to lift punitive tariffs on China even when a trade deal is made. Yet, Bloomberg said Trump want to “sell any eventual trade deal as a win for farmers ahead of the 2020 election”. But there was no explanation on why the agricultural industry has this special privilege over others. And there is no indications on which industries are going to take the burden, and why.

It’s also noted that the shift could make it easier for China to ramp up its purchases of US agricultural goods as part of the trade deal. But again, there is no details on whether China will cut imports from others countries, and who they will buy less from.

At this point, we’ll treat this as a speculation as no one from USTR nor MOFCOM have responded. And we don’t expect them to.

Intellectual property theft, forced technology transfer, market access, and market distortion by subsidies to State Owned Enterprises (SOEs) are among the core issues in US-China trade negotiations. According to a Reuters report quoting unnamed sources, the US is stepping back on its demand regarding SOEs in China.

An important tricky point regarding SOEs is that it’s tightly interwind with the Chinese government’s industrial policy. That’s deeply rooted in the fundamental nature of China’s system, a “systematic rival” to major economies in the world as seen by EU. While China is making concessions in other areas, it’s an area that the socialist country won’t concede ground. A source said that “if U.S. negotiators define success as changing the way China’s economy operates, that will never happen”.

In addition, China is expected to ramp up purchases of US goods as part of the trade deal. But who’s going to make the purchases? It’s most likely the SOEs which the government has direct control on. Thus, another sources said “the purchasing, for example, reinforces the role of the state sector because the purchasing is all being done through state enterprises.”

US Treasury Secretary Steven Mnuchin said trade negotiations with China are “close to the final round of concluding issues”. But he emphasized that this is “not a public negotiation”. And it’s a “very, very detailed agreement covering issues that have never been dealt with before”.

Mnuchin claim that “this is way beyond anything that looked like a bilateral investment treaty.” He said the two sides are negotiating an agreement with seven chapters that would be “the most significant change in the trading relationship in 40 years.”

Also, there will be “real enforcement on both sides”. And he expected the enforcement mechanism to work in “both directions”. “If we don’t, there should be certain repercussions, and the same way in the other direction.”