President Trump and Chinese President Xi Jinping met over a special working dinner during the weekend, and attendees described it as being positive, friendly, and candid. The administration has now tipped Robert Lighthizer to lead a team in upcoming trade talks.

One of the biggest stories to emerge from the weekend’s G20 summit was an agreement between China and the U.S. to work closely towards a new trade deal. President Trump and his administration want major changes in the Chinese economy to allow U.S. businesses to be more competitive.

Robert Lighthizer is a Hard Negotiator

Larry Kudlow, the National Economic Council Director said on a Monday conference call that “Mr. Robert Lighthizer will be as vigilant as anybody in the business in monitoring this, and I hope it has a happy ending.”

Robert Lighthizer has a hard job ahead of him. The U.S. has extensive demands that it wants China to meet before it will relax tariffs and other measures that limit China’s trade. The administration wants new rules on technology transfer, guarantees for the protection of intellectual property, and even wants China to reduce subsidies given to its high-tech sectors.

The U.S. has also told China that it wants an end to forced joint ventures. U.S. companies cannot operate in China without a local partner. This means that firms are required to share proprietary technology. GM, for example, makes cars for the Chinese market through a 50/50 American-Chinese venture.

Earlier this year, the U.S. told China that it wants the trade deficit reduced by $200 billion before 2021.

China has its own demands, asking for market-economy status, a guarantee that new tariffs won’t be implemented, and it wants Trump to stop enforcing tariffs under the blanket justification of national security.

China also threatened during earlier negotiations that if the U.S. were to breach any commitments, then it would withdraw all promises.

Robert Lighthizer

will have to be at his hard-lined best to have China make key concessions. Negotiations throughout this year have been unsuccessful, despite the Presidents of both countries appearing willing to work towards a middle ground.

The Current Calm Has Led to a Market Rally

President Trump had previously downplayed the impact of trade tensions on the stock market, but Monday’s rally tells a different story. Stocks increased 1.1% on the Dow Jones Industrial Average, and the Nasdaq Composite Index made gains of 1.51% after the positive G20 meeting.

Investors are acutely aware of how a strained trade relationship could hurt some of America’s biggest companies. The market will be watching closely to see how the administration works with Chinese counterparts to reach a trade agreement that benefits the economy as well as political interests.