Saudi Arabia's Energy Minister Khalid al-Falih attends a press conference at the end of the 13th meeting of the Joint Ministerial Monitoring Committee (JMMC) of OPEC and non- OPEC countries in Baku on March 18, 2019.
Mladen ANTONOV | AFP
DUBAI — Oil prices rose sharply Tuesday morning on reports of a drone attack at oil pumping stations in Saudi Arabia.
The incident is an "act of terrorism," Saudi Energy Minister Khalid al-Falih said according to the state new agency SPA, describing attacks on two oil pumping stations near Riyadh for the country's East-West pipeline carried out with bomb-laden drones.
The fire has since been contained, according to the SPA. Al-Falih asserted that oil production was not interrupted. State oil company Saudi Aramco said that its oil and gas supplies to Europe have not been affected.
"This act of terrorism and sabotage in addition to recent acts in the Arabian Gulf do not only target the Kingdom but also the security of world oil supplies and the global economy," the SPA described al-Falih as saying.
No one has yet been directly accused of carrying out the attack, but a Houthi-run TV channel announced on Tuesday morning it had launched drone attacks on several Saudi installations.
The channel Masirah TV, citing a Houthi military official, reported that "seven drones carried out attacks on vital Saudi installations."
Al-Falih, according to the SPA statement, said: "These attacks prove again that it is important for us to face terrorist entities, including the Houthi militias in Yemen that are backed by Iran."
Saudi Arabia's main stock index, the Tadawul, was down 1.5% at midday London time.
The exchange, which joined the MSCI emerging markets index this year as part of the country's economic diversification agenda, dropped 2.7% on Monday on government reports that two Saudi oil tankers were among four vessels targeted in an unspecified "sabotage attack" off the United Arab Emirates coast of Fujeirah.
The series of incidents have ramped up tensions in the oil-rich region, where the reported sabotage attack on the commercial vessels that took place Sunday has spiked fears of possible conflict with regional rival Iran.
While no one has been accused of the vessel attack, unnamed U.S. officials have suggested it could be Iran or one of its proxies, the Houthi rebels battling the Saudis in nearby Yemen. The Houthis have launched numerous drone and missile attacks against Saudi Arabia and claim to have carried out drone attacks against the UAE.
Iran has denied any involvement or knowledge of the attacks, and called for an independent investigation. Iran's Foreign Minister Javad Zarif on Tuesday criticized "suspicious developments" in the region he said were aimed at creating tension.
This is a breaking news story, please check back later for more.
The US military is investigating the alleged sabotage attacks on four oil tankers off the coast of the United Arab Emirates (UAE), a US official has confirmed to Al Jazeera.
The move comes as Iran's Foreign Minister Mohammad Zarif said his country had anticipated an event that would escalate tension in the region.
The four ships - two Saudi, one Norwegian and one Emirati - were allegedly damaged on Sunday in what Emirati officials described as acts of sabotage near the port of Fujairah.
The incident happened 140 kilometres south of the Strait of Hormuz, where about a third of all oil traded by sea passes through.
Al Jazeera's Rosiland Jordan, reporting from Washington, said the US military was asked to get involved in the probe.
"A CENTCOM official is confirming to Al Jazeera that, at the request of the United Arab Emirates, the US military is helping with their investigation."
Norwegian-flagged oil tanker MT Andrea Victory off the coast of Fujairah [UAE National Media Council via AP]
The incident comes amid fears in the Middle East that hawks in Washington are trying to provoke a military confrontation between the US and Iran.
Speaking during a visit to India, Zarif said he discussed the oil tanker incident with Indian Foreign Minister Sushma Swaraj, adding that Iran had anticipated "activities to escalate tension" by hardliners in the US and the Middle East.
"We ... talked about the policies that hardliners in the US administration as well as in the region are attempting to impose," Zarif told Iranian state TV in India after a bilateral meeting with Swaraj.
"We raised concerns over the suspicious activities and sabotage that are happening in our region," Zarif added.
"We had formerly anticipated that they would carry out these sorts of activities to escalate tension," the foreign minister said.
Details of the alleged sabotage remained unclear, and UAE officials have declined to say who they suspected was responsible.
But it demonstrated the raised risks for shippers in a region vital to global energy supplies as tensions are increasing between the US and Iran over its unravelling nuclear deal with world powers.
US President Donald Trump has warned Iran that if it does "anything" in the form of an attack it will "suffer greatly".
US military plan
On Monday, the New York Times reported the top US defence official has presented an updated military plan to Trump's administration that envisions sending up to 120,000 troops to the Middle East should Iran attack US forces or accelerate work on nuclear weapons.
Citing unnamed administration officials, the Times said Acting Defense Secretary Patrick Shanahan presented the plan at a meeting of Trump's top security aides on Thursday.
The White House did not immediately respond to a request for comment. The Pentagon declined to comment.
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Tensions between Iran and the US have intensified since Trump pulled out of a 2015 international deal to curb Iran's nuclear activities and imposed increasingly strict sanctions on Tehran.
Trump wants to force Tehran to agree to a broader arms control accord and has sent an aircraft carrier and B-52 bombers to the Gulf in a show of force against what US officials have said are threats to US troops in the region.
Iran has said the US is engaging in "psychological warfare", called the US military presence "a target" rather than a threat and said it will not allow its oil exports to be halted.
The Times said among those attending the Thursday meeting were Trump's NSA John Bolton, CIA Director Gina Haspel, Director of National Intelligence Dan Coats, and Chairman of the Joint Chiefs of Staff General Joseph Dunford.
A team of U.S. military investigators has made an initial assessment that Iran or groups it supports was behind an alleged sabotage attack on 4 tankers in the Gulf of Oman.
President Trump, asked about the incident on Monday, said "it's going to be a bad problem for Iran if something happens."
The White House has ordered a U.S. aircraft carrier strike group and 4 B-52 bombers to the region as tensions with Iran soar.
Images of the ships show little apparent damage, apart from a large hole in one of the tankers, but U.S. officials say each vessel sustained similar damage.
Dubai, United Arab Emirates -- Four oil tankers anchored in the Mideast were damaged by what Saudi and U.S. officials say were "sabotage" attacks, though images of the ships have shown clear visible damage to only one of the vessels. Details of the alleged sabotage to two Saudi, one Norwegian and one Emirati oil tanker on Sunday remained unclear, and none of the nations to which the vessels belong had assigned any blame.
However, on Monday American officials told CBS News senior national security correspondent David Martin that the initial assessment of a U.S. team sent to investigate the incidents was that Iran or Iranian-backed proxies had used explosives to blow holes in the four ships.
The incidents demonstrated the raised risks for shippers in a region vital to global energy supplies as tensions soar between the U.S. and Iran in the wake of President Trump's decision to pull the U.S. out of the nuclear deal agreed by world powers and to impose harsh new sanctions on the Islamic Republic.
Asked at the White House about the incident on Monday, President Trump responded: "It's going to be a bad problem for Iran if something happens."
Meanwhile, Iran's Foreign Minister Javad Zarif, who is currently holding talks with his counterpart in India, said that the U.S. "has been escalating the situation unnecessarily."
"We do not seek escalation but we have always defended ourselves," he said.
The U.S. had warned sailors of the potential for attacks by Iran or groups it backs on commercial sea traffic just days before the alleged sabotage, and regional allies of the United Arab Emirates condemned the incidents as the tankers were off the coast of the UAE port city of Fujairah.
The U.S. Navy's 5th Fleet, which patrols the Mideast and operates from a base in Fujairah, has repeatedly declined to comment.
Saudi Arabia claims "sabotage attacks" on oil tankers
The Trump administration has already sent four B-52 bombers to the Persian Gulf to counter alleged, still-unspecified threats from Tehran, and the USS Abraham Lincoln aircraft carrier strike group is also headed for the Gulf.
Spanish ship backs out
On Tuesday, Spain temporarily pulled one of its frigates that's part of a U.S.-led combat fleet from near the Persian Gulf because of mounting U.S.-Iran tensions. The Ministry of Defense said the Méndez Núñez, with 215 sailors on board, would not cross the Strait of Hormuz into the Gulf together with the USS Abraham Lincoln.
The Ministry declined to elaborate on the reasons for the sudden change.
Spanish media, citing government sources, said Spain was concerned that it could be dragged to an unwanted conflict as a result of the crisis between Washington and Teheran surrounding the unraveling nuclear deal.
The Spanish frigate was the only non-U.S. vessel in the fleet.
Damage to ships unclear
The scale of the alleged sabotage remained unclear. A statement from Saudi Energy Minister Khalid al-Falih said two of the kingdom's oil tankers, including one due to later carry crude to the U.S., sustained "significant damage." However, a report from Sky News Arabia, a satellite channel owned by an Abu Dhabi ruling family member, showed the allegedly targeted Saudi tanker Al Marzoqah afloat without any apparent damage.
The oil tankers were visible in satellite images provided Tuesday to the AP by Colorado-based Maxar Technologies. A boom surrounded the Emirati oil tanker A. Michel, indicating the possibility of an oil leak. The other three showed no visible major damage from above.
The MT Andrea Victory, the fourth allegedly targeted ship, sustained a hole in its hull just above its waterline from "an unknown object," its owner Thome Ship Management said in a statement. Images on Monday of the Norwegian-flagged Andrea Victory, which the company said was "not in any danger of sinking," showed damage similar to what the firm described.
Port officials take a photo of the damaged Andrea Victory tanker at the Port of Fujairah, United Arab Emirates, May 13, 2019.
REUTERS
A U.S. official told the Associated Press that each ship sustained a 5- to 10-foot hole, near or just below the water line, suspected to have been caused by explosive charges. Emirati officials had requested the team of U.S. military investigators aid them in their probe.
Splash247.com, a shipping and maritime news website, quoted officials at the port in Fujairah as saying "limpet mines" were the suspected weapons used to cause the damage. They are magnetic bombs that can be stuck onto steel-hulled vessels by anyone who can get close enough on a small boat, or by divers in the water.
"Our aim is not war"
Citing heightened tensions in the region, the United Nations called on "all concerned parties to exercise restraint for the sake of regional peace, including by ensuring maritime security" and freedom of navigation, U.N. deputy spokesman Farhan Haq said.
Shortly after the Saudi announcement that two of the country's tankers had been attacked, Iran's Foreign Ministry called for further clarification about what exactly happened with the vessels. The ministry's spokesman, Abbas Mousavi, was quoted by the official IRNA news agency as warning against any "conspiracy orchestrated by ill-wishers" and "adventurism by foreigners" to undermine the maritime region's stability and security. Both the UAE and Saudi Arabia are staunch opponents of Iran's government.
Tensions have risen since Mr. Trump withdrew America from the 2015 nuclear deal between Iran and world powers. Last week, Iran warned it would begin enriching uranium at higher levels in 60 days if world powers failed to negotiate new terms for the deal.
Mulvaney says U.S. "not going to war in Iran" amid rising tensions
European Union officials met Monday in Brussels to thrash out ways to keep the Iran nuclear deal afloat. U.S. Secretary of State Mike Pompeo had traveled there for talks.
"We're not going to miscalculate. Our aim is not war," Pompeo told CNBC in an interview. "Our aim is a change in the behavior of the Iranian leadership."
Speaking before the Brussels meeting on Monday, Britain's Foreign Minister Jeremy Hunt warned of the risks of an "accident" sparking a conflict between the United States and Iran.
"We are very worried about the risk of a conflict happening by accident with an escalation that is unintended," Hunt said.
Underlying the regional risk, the general-secretary of the six-nation Gulf Cooperation Council described the alleged sabotage as a "serious escalation," and said "such irresponsible acts will increase tension and conflicts in the region and expose its peoples to great danger."
Two crashes of Boeing 737 Max airliners within five months claimed 346 lives, people who were unlucky enough to fly in jets cursed with a combination of faulty sensors, flawed automatic anti-stall software, and dysfunctional warning systems.
The unsafe aircraft dealt a devastating blow to the reputation of Boeing, revealing the once-iconic American corporation as callous, careless, secretive, ill-governed, arrogant, and averse to accountability. And it shook public confidence in the Federal Aviation Administration, the agency that’s supposed to watchdog air travel but allowed the 737 Max into the skies and then was slow to ground them after the crashes.
Boeing’s lapses leading up to crashes may result in criminal charges — the Justice Department is investigating. But even if the company escapes punishment, Boeing and its regulator need to recognize that rebuilding public confidence will take decisive action.
For starters, the bungles leading up to the two crashes should cost Dennis Muilenburg, Boeing’s all-too-powerful president, CEO, and board chairman, his job. Boeing is no ordinary private company; it has a responsibility to ensure the safety of the flying public. But asked recently if he had considered resigning over the company’s missteps, Muilenberg dodged the question with this comment: “I am very focused on safety going forward. It is important that as a company we have those clear priorities, that we are taking the right actions, that we have the right culture.”
Even though the planes’ anti-stall systems apparently caused the fatal dives, Muilenburg has tried to deflect blame, saying that safety “procedures were not completely followed” and problems with that system were part of a larger “chain of events.” There, he again seemed to be suggesting that the pilots were at least partially at fault. Speaking about the software fix Boeing is preparing, Muilenburg added: “This will make the airplane even safer.” Even safer? That will surely come as great comfort to families who lost loved ones in these two crashes.
Despite Muilenburg’s spin, the list of Boeing’s malfeasance, miscues, and mistakes is long, and they occurred on his watch. The company knew back in 2017 that an alert to warn pilots that the plane’s angle-of-attack sensors were transmitting conflicting information — the situation that apparently prompted the anti-stall system to push the airliners’ noses down — did not work without an optional indicator, which many customers hadn’t purchased. Without that warning, pilots wouldn’t quickly be alerted to the likely cause of the dive. Still, Boeing didn’t tell its customers in a timely way of that problem, nor was there a sense of urgency it needed to be fixed.
Only after the October 2018 Lion Air crash, which cost 189 lives, did Boeing inform its customers of that glitch. Yet even after that first crash, Boeing insisted an inoperative warning system wasn’t a safety problem. No one on the company’s board of directors raised concerns, according to the Washington Post. Indeed, Boeing doesn’t count any safety experts among its members.
After that initial crash, Boeing could have saved lives if it had voluntarily grounded the 737 Max. It didn’t. Amazingly, Boeing was reportedly reluctant to accede to grounding the plane even after the second crash, this one of an Ethiopian Airlines jet in March, which cost 157 lives. Only after a Canadian source revealed that anti-stall system had been activated before that crash as well, did Boeing call the White House to recommend that the plane be grounded. Shortly thereafter, President Trump announced that he was ordering the airplane grounded.
It’s also disturbing that the administration and the FAA only came to that decision after Boeing’s call. That suggests the regulatory agency, which has been inadequately funded over time, and has had an acting administrator for 16 months under Trump, is subservient to the corporate behemoth. Congress should better fund the FAA and put a premium on strengthening the agency’s independent expertise.
In addition to the federal criminal probe, the FAA’s inspector general is reviewing the process by which the agency certified the 737 MAX as safe, and congressional committees are investigating. It’s hard to know where the criminal inquiry will go, but both DOJ and Congress should demand that Boeing’s governance be restructured so that the president and CEO doesn’t also chair the board of directors. That board also needs an airplane-safety committee with the expertise and authority to ask tough questions. The FAA should resist pressure to certify the 737 Max safe until Canada and the European Union also agree.
Once the 737 Max is recertified to fly, Boeing reportedly plans a public-relations campaign to reassure customers that it’s safe. But accountability and action will speak far more persuasively than words when it comes to blundering Boeing and its star-crossed airliner.
RIYADH/DUBAI (Reuters) - The U.S. ambassador to Saudi Arabia said Washington should take what he called “reasonable responses short of war” after it had determined who was behind attacks on oil tankers off the coast of the United Arab Emirates.
A technical staff is seen at the Port of Fujairah, United Arab Emirates, May 13, 2019. REUTERS/Satish Kumar
Iran was a prime suspect in the sabotage on Sunday although Washington had no conclusive proof, a U.S. official familiar with American intelligence said on Monday. Iran has denied involvement.
“We need to do a thorough investigation to understand what happened, why it happened, and then come up with reasonable responses short of war,” Ambassador John Abizaid told reporters in the Saudi capital Riyadh in remarks published on Tuesday.
“It’s not in (Iran’s) interest, it’s not in our interest, it’s not in Saudi Arabia’s interest to have a conflict.”
Four commercial vessels, including two Saudi oil tankers, were sabotaged on Sunday near Fujairah, one of the seven emirates of the UAE and a bunkering hub just outside the Strait of Hormuz. UAE authorities did not say who was behind the attack.
Distancing Tehran from the incident, Iran’s Foreign Ministry called it “worrisome and dreadful”.
Iran is embroiled in a war of words with the United States over sanctions and the U.S. military presence in the region.
Washington has increased sanctions on Tehran, saying it wants to reduce Iranian oil exports to zero, after quitting the 2015 nuclear pact between Iran and global powers last year.
The U.S. Maritime Administration said last week that Iran could target U.S. commercial ships including oil tankers sailing through Middle East waterways. Tehran has called the U.S. military presence “a target” rather than a threat.
U.S. Secretary of State Mike Pompeo shared information on what he called escalating threats from Iran during meetings with EU counterparts and the head of NATO in Brussels on Monday, the U.S. special representative for Iran Brian Hook said.
Hook declined to say whether he believed Iran played a role in the attacks off Fujairah or if Pompeo blamed Iran. He said the UAE had sought U.S. help in the investigation.
COOL HEADS MUST PREVAIL
Newspapers in the UAE, which are heavily controlled by the government, ran editorials urging caution in responding to the attack, which risks undermining the Gulf Arab state’s image as a regional bastion of stability and security.
“While further details are yet to emerge about this worrying incident, cool heads must prevail, and proper measures should be taken to ensure that this situation does not spin out of control,” wrote the editorial board of Abu Dhabi-based The National.
Gulf News, a state-linked Dubai daily, said “rogue actors must be brought to book”.
Saudi Arabia’s energy minister said on Monday that the attack aimed to undermine security of global crude supplies.
A fifth of global oil consumption passes through the Strait of Hormuz from Middle East crude producers to markets in Asia, Europe, North America and beyond. The narrow waterway separates Iran from the Arabian Peninsula.
Oil prices were up slightly on Tuesday, though checked amid an escalation in the trade war between the U.S. and China.
Gulf Arab stock markets rebounded in early trading. The Saudi index was up 1.4 percent after two days of heavy losses and Dubai stock index was trading 2.4 percent higher after its biggest one-day loss in years on Monday.
U.S. President Donald Trump wants to force Tehran to agree a broader arms control accord and has sent an aircraft carrier and B-52 bombers to the Gulf in a show of force against what U.S. officials have said are threats to U.S. troops in the region.
Iran’s Revolutionary Guards, designated a terrorist organization by Washington, threatened last month to close the Hormuz chokepoint if Tehran was barred from using it.
Writing by Stephen Kalin, Editing by Angus MacSwan
SEOUL, South Korea — North Korea on Tuesday demanded the release of a ship impounded by the United States for evading international sanctions, calling the seizure a “flagrant act of robbery” that violated the spirit of the agreement reached last year between the North’s leader, Kim Jong-un, and President Trump.
American prosecutors say the North Korean ship, the Wise Honest, was used to export coal and import heavy machinery in violation of sanctions imposed on the North over its nuclear arms program. The ship was detained in Indonesian waters by the authorities there in April of last year, and its seizure by the United States was announced last week. The ship has since been taken to American Samoa.
“The United States’ action is an extension of its calculation aimed at subjugating us through the so-called maximum pressure and flatly denies the spirit of the June 12 Joint North Korea-U.S. Declaration where both sides agreed to build new relations,” the North Korean Foreign Ministry said in a statement, referring to the broad agreement reached between Mr. Trump and Mr. Kim at their first meeting, in Singapore.
“The United States must mull over what repercussions its gangster-like act will entail, and must return our vessel without delay,” the ministry said.
The seizure of the Wise Honest was the first time the United States had impounded a North Korean cargo vessel for alleged international sanctions violations. The Americans announced it soon after North Korea fired off two short-range missiles, its second such launch in five days.
Analysts said the North’s resumption of short-range missile tests was aimed at pressuring Washington to ease its stance on sanctions relief, after the collapse in February of the second summit meeting between Mr. Trump and Mr. Kim. Those talks, in Vietnam, ended early after Mr. Trump rejected Mr. Kim’s offer to dismantle one of its nuclear facilities in exchange for lifting the most painful sanctions. Mr. Trump insisted on a full dismantlement of its nuclear program.
North Korea is desperate to lift a series of United Nations Security Council sanctions imposed between 2016 and 2017. Unlike previous sanctions that targeted the North’s ruling elite, these penalties sought to strangle North Korea’s economy by banning all the country’s key exports, including coal, iron ore, textiles, fisheries and cheap workers. They also sought to drastically curtail North Korea’s ability to import fuel.
Mr. Kim has said he would abandon diplomatic engagement with the United States and find a “new way” of protecting his country’s national interests unless the United States changed course. He gave Mr. Trump until the end of the year to offer a new proposal for ending the nuclear crisis on the Korean Peninsula.
But the seizing of the Wise Honest indicated that the United States was redoubling its efforts to enforce the sanctions, particularly by cracking down on illegal ship-to-ship transfers of fuel and coal.
Analysts said the North’s recent short-range missile launches were meant to warn the United States that it would return to bolder missile tests unless the United States compromised on sanctions. They said the impounding of the Wise Honest provided North Korea with an excuse to escalate tensions that were already on the rise.
If North Korea resumes intermediate- and long-range ballistic missile tests, it will undermine Mr. Trump’s biggest diplomatic achievement in dealing with North Korea so far. The North has not launched a long-range missile since late 2017, something Mr. Trump has repeatedly cited as proof that his diplomacy was working.
In their broadly worded Singapore agreement, Mr. Trump and Mr. Kim promised to build a “new” relationship between the two nations and work toward the “complete denuclearization of the Korean Peninsula.”
A personal duel between two rival presidents could ensure that the escalating trade war across the Pacific may last longer than anyone expected.
The showdown is now no longer just a confrontation between China and the US -- one a rising power challenging the long established dominance of the global economic leader. It's become a test of wills between two of the world's most powerful men, each of whom has political interests that are more likely to deepen the conflict than to quickly ease it.
Both view themselves as strongmen. Both have imposed their power on their domestic governing systems by force of will. Both have the authority to trigger global shock waves -- as they did when markets plunged following Trump's tariff hikes last week and China's multi-billion dollar retaliation on Monday.
Both see the honor of their nation at stake at a crucial moment in the history of US-China relations, as the emerging competition between two great powers becomes sharper than ever.
While Trump has said the two sides were on the verge of a deal last week before China backed out, the gulf in intention between the two giant economies will complicate future talks.
Trump -- lambasting Chinese intellectual property theft and support for state industries -- believes he has to change the global trading system itself because it is a massive ripoff for the United States.
And Trump thinks the strength of the US economy gives him an edge and the ability to pin the blame for the impasse on Xi.
"We are right where we want to be with China. Remember, they broke the deal with us & tried to renegotiate," Trump tweeted on Sunday.
Xi sees US demands as an infringement on Chinese sovereignty and has an incentive to keep globalization intact since China has profited handsomely from the status quo in a stunning 20-year growth explosion.
The Chinese leader is no keener to climb down than Trump.
"China feels it does not have to give in," Max Baucus, a former US ambassador to China told CNN's Kate Bolduan on Monday.
"Add to that, saving face is a big deal in China. President Xi Jinping does not want to appear to have backed down. I don't think Americans understand that," the former Montana senator said.
One reason why the dispute could go on for a while is because Trump seems to sincerely believe he is winning.
Convinced of the primacy of the healthy US economy, willing to shrug off a day's losses on the stock market and wielding his favorite tariff tool, Trump is not at all fazed.
"We're in a very good position, and I think it's only going to get better," Trump said Monday.
Trump is often ideologically supple and could turn on a dime on the dispute. But he's held deep seated beliefs about China's economic threat for decades and has long advocated a protectionist remedy. This is one issue that he's shown that he really does believe in. After all, he seems ready to gamble on the health of the US economy -- his best political asset heading into his 2020 reelection race.
The President's hawkish comments on Monday might have been an attempt to calm tumbling markets. But they also entrenched a position from which it will be hard to abandon without being embarrassed.
For now at least, before damage to the economy and consumer budgets from the deepening trade war becomes obvious, Trump may believe he will prosper politically from standing up to China.
Trump is also using the China confrontation to emphasize his contrast with former Vice President Joe Biden, the apparent 2020 Democratic front-runner.
Biden complained Monday that Trump was approaching the trade spat all wrong by showing "a lot of bravado, no action."
The President however has already charged that Biden is too weak to take on Xi -- and clearly enjoys the contrast.
"China is DREAMING that Sleepy Joe Biden, or any of the others, gets elected in 2020. They LOVE ripping off America!" Trump tweeted over the weekend.
Trump's big gamble
Trump's foreign policy bets are often motivated by a desire to shore up his domestic standing. And CNN recently reported that Trump is desperate to deliver on his self-image as a master deal maker, another reason it will be tough for him to fold.
The big political risk for the President is that a prolonged trade war of attrition begins to erode US growth, devalues 401ks in a market correction and tarnishes the economic feel good factor and undermines Trump's boasts of a new era of prosperity.
Voters could tire of paying an effective sales tax on goods like iPhones, toys and foodstuffs, despite Trump's assurance that China and not US consumers foot the bill for tariffs.
US exporters will take a hit from China's tariffs and US manufacturing will also suffer.
Rick Helfenbein, CEO of the American Apparel and Footwear Association, said his industry was "beyond freaked."
"(We are) sitting around feeling like we have just bought tickets for the second sailing of The Titanic, the only difference now is we know exactly where the icebergs are," Helfenbein said on CNN.
The pain of farmers already suffering from Chinese retaliatory tariffs -- especially those in the swing state Midwest -- could also deliver Trump a 2020 shock.
Punishing Beijing could also have other spillover effects. If China is slowed, other economies, including US export markets in Asia and Europe, could suffer and hurt US jobs and prosperity.
"If we get the full throttle of all tariffs it does risk a recession," Diane Swonk, chief economist of Grant Thornton, told CNN's Brooke Baldwin on Monday.
Such a doom-laden scenario is one reason why some analysts still bet Trump will close a deal after a period of posturing.
He has, after all, frequently escalated a crisis, then stepped back -- while declaring incremental changes to an existing agreement as a massive victory for the United States.
The scenario eventually eased the crisis over the renegotiation of the North America Free Trade Agreement and offers a blueprint for a deal at the G20 should Trump's political calculation over the China trade war change.
Xi's choice
The confrontation has already revealed a truth that reflects an important geopolitical evolution: Beijing is not afraid of the United States.
Trump spent the weekend warning China on Twitter that it would be "hurt very badly" if it didn't do a deal.
Like Trump, Xi is not immune to political pressures.
Although he is the most dominant Chinese leader in decades, he cannot completely ignore complicated internal Communist Party dynamics. Chinese leaders are always wary of any changes to social conditions -- that could be brought on by a slowing economy -- that could cause public resentment and translate into political activity.
China is also sensitive to its own experience under colonialism and proud of its rise as a key regional power and global player. So there is no circumstance under which Xi could allow himself to be seen as bowing to bullying from any Western leader, let alone an American president as combative as Trump.
Baucus said that Americans underestimated China's size, power and leverage. He also said that Beijing was playing a far longer game than Washington and, with the leadership's iron grip on dissent, could afford to absorb the painful side effects of a trade war.
"I think those who think the US (has) leverage do not really fully understand China. China thinks long term. China is an authoritarian government. Their party controls everything," he said.
Both Xi and Trump know the other has much to lose. The question now is the age old diplomatic conundrum: Can they forge an outcome that gives both the option to declare victory?
