The U.S. trade war with China is “on hold” after the world’s largest economies agreed to drop their tariff threats while they work on a wider trade agreement, U.S. Treasury Secretary Steven Mnuchin said earlier this week.
Tension between the two sides has been growing since the Trump administration proposed punitive tariffs of $50 billion on Chinese goods and said it might extend the levies to an additional $150 billion. China responded with its own measures targeting U.S. agriculture.
Mnuchin and President Trump’s top economic adviser, Larry Kudlow, said the agreement reached by Chinese and American negotiators on Saturday set up a framework for addressing trade imbalances in the future. “Right now, we have agreed to put the tariffs on hold while we try to execute the framework,” Mnuchin said in a television interview on “Fox News Sunday.”
Beijing and Washington said they would keep talking about measures under which China would import more energy and agricultural commodities from the United States to close the $335 billion annual U.S. goods and services trade deficit with China.
On Wednesday, President Trump downplayed expectations for a China trade deal to be hatched soon. “Our trade deal with China is moving along nicely, but in the end, we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion,” President Trump said in an early morning tweet.
The White House has threatened to impose steep tariffs on Chinese goods entering the United States. unless China cuts its trade deficit with the U.S. by $200 billion in two years. However, no dollar figure was cited in the countries’ joint statement on Saturday. Kudlow told CBS “Face the Nation” it was too soon to lock in the $200 billion figure for China’s promised purchases. “The details will be down the road. These things are not so precise,” he said.
U.S. Trade Representative Robert Lighthizer said that getting China to open its market to more U.S. exports was significant, but that it was far more important for the United States to resolve issues with China such as forced technology transfers and cyber theft. “Real structural change is necessary. Nothing less than the future of tens of millions of American jobs is at stake,” Lighthizer said in a statement.
In response to Mnuchin’s comments, Democratic Senator Chuck Schumer of New York said he thought it would be a mistake for Trump to settle for “a promise to buy goods” with so many larger issues on the table. “If President Xi is going to fail to take strong actions on intellectual property, cyber theft, and American companies having free access to sell goods in China, we will have lost,” Schumer said.
One next step will be dispatching Commerce Secretary Wilbur Ross to China to look at areas where there will be significant increases, including energy, liquefied natural gas, agriculture and manufacturing, Mnuchin and Kudlow said. Mnuchin said the United States expects to see a big increase of between 35 percent and 40 percent in agricultural exports to China this year alone and a doubling of energy purchases over the next three to five years.
Saturday’s statement made no mention of whether there would be a relaxation of paralyzing restrictions on Chinese telecommunications equipment maker ZTE imposed last month by the U.S. Commerce Department. The action was related to violation of U.S. sanctions on Iran and North Korea and banned American companies from selling semiconductors and other components to ZTE, causing the Shenzhen-based company to cease most operations.
