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US-China: My Way Or The Huawei

US-China: My Way Or The Huawei

Trade negotiations between the US and China took another step forward yesterday, with the Chinese taking steps to lower tariffs on US automobiles from 40 to 15 percent. The move further eases tensions after Presidents Trump and Xi declared a "trade truce" in Buenos Aires earlier this month.


In the background, though, a diplomatic and legal spat is unfolding that could prove far more consequential for the future of trade talks, and potentially the broader US-China relationship.

My colleague Willis Sparks wrote on Friday about the arrest of Meng Wanzhou, a top executive at the Chinese telecom giant Huawei , who was detained in Canada and is fighting extradition to the US over charges related to alleged violations of Iran sanctions. On Monday, a Canadian diplomat and aid worker, Michael Kovrig, was taken into custody in Beijing. The US is reportedly considering issuing a travel advisory for all Americans planning to visit China.

With so much at stake, here's a quick rundown on the latest twist in the US-China trade war:

The short-term problem: Washington and Beijing appear intent on not letting Meng's arrest upend their fragile trade truce. But the Huawei affair will probably make it harder to reach a meaningful breakthrough ahead of a March 1 deadline – after which US tariffs will rise on billions of dollars of Chinese goods. The arrest of Kovrig may be intended as a shot across the bow intended to influence the course of Meng's case.

While Meng was released on bail on yesterday, there's still a lot that could go wrong between now and March 1. Any appearance that she is being humiliated – by being put on a plane to the US in shackles, say – will inflame nationalist fervor around the incident in China and hinder Xi's ability to negotiate with the US on trade. President Trump, for his part, has hinted that the US might intervene in Meng's case if it was "good for what will be certainly the largest trade deal ever made." But he may have limited influence over how the case unfolds, given that it's primarily a law enforcement matter.

The longer-term problem: Even if Meng is eventually freed, Huawei itself could still face serious legal jeopardy in the US. Recall that Huawei's smaller rival ZTE was nearly pushed into bankruptcy earlier this year when the Commerce Department banned it from acquiring US technology for seven years in a similar sanctions case, before Trump granted it a last-minute reprieve.

China hawks in the Trump administration and Congress will almost certainly now push for similar treatment of Huawei. If they succeed, it would be politically explosive: Huawei is one of the world's leading suppliers of next-generation 5G networking technology, and it's much more critical to China's long-term tech and industrial ambitions than ZTE. China would likely see any move to restrict the export of US parts to Huawei as tantamount to a declaration of economic war.

The bottom line: Forget the car tariffs and other cosmetic trade fixes – if you want to know where the US-China relationship is going, keep an eye on what happens with Meng and Huawei.

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Learn more about how carbon created life on Earth in the second episode of Eni's Story of CO2 series.

As we enter the homestretch of the US presidential election — which is set to be the most contentious, and possibly contested, in generations — Americans are also voting on 35 seats up for grabs in a battle for the control of the Senate. The 100-member body is currently held 53-47 by the Republican Party, but many individual races are wide open, and the Democrats are confident they can flip the upper chamber of Congress.

Either way, the result will have a profound impact not only on domestic policy, but also on US foreign relations and other issues with global reach. Here are a few areas where what US senators decide reverberates well beyond American shores.

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On September 23, GZERO Media — in partnership with Microsoft and Eurasia Group — gathered global experts to discuss global recovery from the coronavirus pandemic in a livestream panel. Our panel for the discussion Crisis Response & Recovery: Reimagining while Rebuilding, included:

  • Brad Smith, President, Microsoft
  • Ian Bremmer, President and Founder, Eurasia Group & GZERO Media
  • Jeh Johnson, Partner, Paul, Weiss, Rifkind, Wharton & Garrison, LLP and former Secretary of Homeland Security.
  • John Frank, Vice President, UN Affairs at Microsoft
  • Susan Glasser, staff writer and Washington columnist, The New Yorker (moderator)

Special appearances by UN Secretary-General António Guterres, European Central Bank chief Christine Lagarde, and comedian/host Trevor Noah.

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Jon Lieber, who leads Eurasia Group's coverage of political and policy developments in Washington, offers insights on the Supreme Court vacancy:

Will Senate Republicans, who stopped a Supreme Court nomination in 2016, because it was too close to an election, pay a political price for the change in tactics this time around?

Not only do I think they won't pay a political price, I think in many cases, they're going to benefit. Changing the balance of power on the Supreme Court has been a career-long quest for many conservatives and many Republicans. And that's why you've seen so many of them fall in line behind the President's nomination before we even know who it is.

At this point, do Senate Democrats have any hope of stopping President Trump from filling the ninth seat on the Supreme Court?

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In a special GZERO Media livestream on global response and recovery amid the COVID-19 pandemic, Eurasia Group & GZERO Media president Ian Bremmer discussed the difference between Europe's unified approach to economic stimulus and the deeply divided and political nature of the current conversation in the US. While initial stimulus support was bipartisan, there is little chance of Democrats and Republicans coming together again ahead of the November 3 presidential election. "It's red state versus blue state. President Trump's saying that coronavirus isn't so bad if you take the blue states out. He's president of the blue states, you can't take the blue states out," Bremmer told moderator Susan Glasser of The New Yorker.

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Panel: How will the world recover from COVID-19?

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