"Too Soon:" China's Xi Unwilling To Rush "Phase 1" Trade Deal Signing

The positive tone of trade-related leaks and jawboning last week has decidedly faded into uncertainty surrounding reports that Beijing is demanding larger reductions in tariffs before committing to the 'Phase 1' deal that Trump once described as practically finished.

And in the latest leak likely intended to undermine American markets, the SCMP reports that Chinese President Xi Jinping's planned trip to Brazil next week would likely come too early for him to sign the "Phase 1" trade deal. Analysts in recent days had speculated about the trip to an emerging-markets summit in Brasilia, with many hoping it might present an opportunity for Xi to stop over in the US and seal the deal, since Chile cancelled the APEC Summit that was supposed to host the deal-signing later this month.

Unfortunately, as we've learned in recent days, the two sides have yet to reach a consensus. And that probably won't happen until after President Xi has safely returned to Beijing. Perhaps just as disheartening for algos, the SCMP cited Chinese sources claiming Xi wouldn't agree to a meeting in the US, the latest indication that an agreement on a meeting location had become a serious side-issue in the negotiations. Reuters reported something similar earlier.

Leaders from Brazil, Russia, India and South Africa are expected to attend the summit, which is set for November 13 and 14, alongside Xi.

Meanwhile, Chinese media are reporting that Beijing is demanding the removal of all American trade-war tariffs before agreeing to even a partial deal, a position that Washington has repeatedly rejected as a dealbreaker.

"The deal is not balanced yet," the person said, declining to be named because of the sensitivity of the issue.

"The US needs to give a more solid commitment to China on the tariff issue. At least the US should drop the December 15 tariffs or stop labelling China as a currency manipulator, to show dignity to China."

One media org said the removal of tariffs was Beijing's "innermost concern."

We've explained time and time again how Washington sees the tariffs as a critical enforcement mechanism. If there can be no agreement on this issue, then it's likely both sides with dig in for an extended trade war that could endure for years, and perhaps create unprecedented strains in the relationship between the world's two largest economies, and two most dominant military powers in the Pacific.