Treasury chief Steven Mnuchin ‘hopeful’ US and China can reach agreement over trade

Mnuchin confident that trade war can be averted despite Trump’s plan to impose tariffs on Chinese imports

PUBLISHED : Monday, 26 March, 2018, 2:14pm
UPDATED : Monday, 26 March, 2018, 11:02pm

US Treasury Secretary Steven Mnuchin has said he was optimistic America could reach an agreement with China that will avert the need for President Donald Trump to impose tariffs on goods from the country.

“We’re having very productive conversations with them,” Mnuchin told Fox News Sunday. “I’m cautiously hopeful we reach an agreement.”

On Thursday Trump directed Mnuchin to propose new investment restrictions on Chinese companies within 60 days to safeguard technologies the US views as strategic. The White House has also said that he wants a US$100 billion decrease in the trade deficit with China.

A day after Trump’s announcement, which led to a sell-off in global markets, China unveiled tariffs on US$3 billion of US imports in response to steel and aluminium duties ordered by Trump earlier this month. The White House then declared a temporary exemption for European Union countries and other nations on those levies, making the focus on China clear.

Though Beijing’s actions so far are seen by analysts as measured, there may be more to come.

China was conducting research on further lists of US imports that would be subject to tariffs, which were likely to cover planes, computer chips and the tourism industry, China Daily reported on Saturday, citing Wei Jianguo, a former vice-commerce minister.

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Mnuchin said the two countries agreed on reducing the deficit to some degree and were trying to “see if we can reach an agreement as to what fair trade is for them to open up their markets, reduce their tariffs, stop forced technology transfer”.

Both Mnuchin and US Trade Representative Robert Lighthizer detailed a list of specific requests for China in a letter late last week to Vice-Premier Liu He, according to The Wall Street Journal.

The list includes a reduction of Chinese tariffs on US cars, more Chinese purchases of US semiconductors and greater access to China’s financial sector by American companies, the report said, adding that Mnuchin is considering a trip to Beijing for negotiations.

The US would proceed with tariffs “unless we have an acceptable agreement that the president signs off on”, Mnuchin said on Sunday.

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“We’re not afraid of a trade war, but that is not our objective,” he said. “In a negotiation you have to be prepared to take action.”

Mnuchin’s comments came after the administration announced a deal with South Korea that he said would limit the amount of steel imported into the US.

The American trade gap in goods with China surged 8.1 per cent in 2017 to a record US$375 billion, according to February data from the US Commerce Department.

Equity indexes tumbled worldwide last week, with European stocks falling to the lowest in more than a year.

A Chinese Communist Party newspaper on Saturday listed US companies that would be “most damaged” if a trade war began – including Apple, Intel and Boeing.

Apple’s Tim Cook said during a forum in Beijing on Saturday he was going to encourage that “calm heads prevail” on the potential trade war. China is Apple’s single most important market outside the US.

“The countries that embrace openness do exceptional and the countries that don’t, don’t,” he said. “It’s not a matter of carving things up between sides.”