WASHINGTON — U.S. Treasury Secretary Steven Mnuchin said Sunday that the Trump administration will hold off from imposing tariffs on China as leaders from both nations try to hammer out agreements on trade.
The administration had threatened $50 billion to $150 billion in tariffs on Chinese goods as a way to deter the theft of U.S. intellectual property and forced transfers of technology. Beijing countered by threatening tariffs on $50 billion worth of U.S. farm, chemical and other exports.
But Mnuchin said Sunday that the two sides agreed on a framework for reducing the U.S. trade deficit with China and addressing technology trade irritants during high-level talks on Thursday and Friday, although more meetings are required to finish the deal.
“Were putting the trade war on hold,” Mnuchin said in an interview on “Fox News Sunday.” “Right now, we have agreed to put tariffs on hold while we try to execute the framework.”
The U.S. trade deficit with China totaled a record $375 billion in 2017, and the Trump administration asked the Chinese to commit to the goal of reducing it by $200 billion by 2020.
A joint U.S.-China statement released Saturday said “China will significantly increase purchases of United States goods and services,” but did not specify how much more it would buy and how soon those sales would take place.
Mnuchin said he expected major purchases this year, particularly of U.S. agriculture and energy products.
“We are immediately going to follow this up with [Commerce Secretary Wilbur] Ross going there with very hard commitments in agriculture, where we expect to see a very big increase — 35-40 percent increases — in agriculture this year alone,” Mnuchin said. “In energy, doubling the energy purchases. I think you could see $50 [billion], $60 billion a year of energy purchases over the next three to five years. And strategically, thats very important for us and very important for them.”
Mnuchin declined to confirm whether China had agreed to a specific commitment to reduce the U.S. trade deficit with the country by $200 billion.
“We have specific targets,” Mnuchin said. “Im not going to publicly disclose what they are. They go industry by industry.”
President Donald Trump has repeatedly said China has taken advantage of trade deals, telling reporters on Thursday that the nation has become “very spoiled.” On the campaign trail, he said tariffs would be necessary in some cases to show that the U.S. is not playing games anymore.
A senior administration official said Trump wants to keep the possibility of tariffs on China alive but is satisfied with the direction of talks thus far. So, he is inclined to tone down the threats and trade war rhetoric as the discussions continue, the official told POLITICO.
Economist Steve Moore, who is close to the Trump administration after serving as an economic adviser to the campaign, said the teeter-totter nature of the China talks was quintessential Trump, offering that the latest turn was part of his negotiating tactics.
“If there is minimal progress, I do think Trump will impose tariffs on China. It was a major campaign promise of his. And this is a guy who keeps his promises,” Moore said.
“I dont see him stepping back from his demand that China open up its markets,” Moore added. “Trump is obsessed with the trade deficits … and there is going to have to be some kind of deal that brings down the China trade deficit.”
U.S. Trade Representative Robert Lighthizer, one of the driving forces behind the intellectual property theft investigation that led Trump to threaten tariffs on $50 billion to $150 billion worth of Chinese goods, said in a statement that the two sides have “agreed on a framework to address the very serious issues raised” in that probe. That includes putting the tariffs on hold, but keeping them in reserve if needed.
Lighthizer also downplayed the importance of China reducing trade barriers and increasing purchases of U.S. goods compared to ending practices that threaten the United States ability to maintain its technological edge.
“Getting China to open its market to more U.S. exports is significant, but the far more important issues revolve around forced technology transfers, cyber theft and the protection of our innovation,” Lighthizer said.
“As this process continues, the United States may use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations. Real structural change is necessary. Nothing less than the future of tens of millions of American jobs is at stake,” he said.
The tech industry welcomes the trade war cease-fire as a good step that will shield consumers from higher costs, said Dean Garfield, president and CEO of the Information Technology Industry Council, a lobby group for Amazon, Google and others. But China still needs to make changes to level the playing field for American firms, he said.
Meanwhile, Senate Minority Leader Chuck Schumer said Sunday that it is up to Trumps team not to “blow it” with China.
“There is nothing wrong with these talks but the proof of the pudding is in the eating,” Schumer said in a statement. “If President Xi is going to escape meaningful punishment for ZTE and fail to take strong actions on intellectual property, cyber theft, and American companies having free access to sell goods in China, and instead simply provide a promise to buy goods for the next few years, we will have lost.”
Schumer was referring to the Chinese technology company ZTE, which faces stiff penalties for violating U.S. sanctions against North Korea and Iran. Trump said last week that he would look into helping the company escape some of its harshest penalties. After talking with Chinese President Xi Jinping, Trump wrote on Twitter that he and Xi were working together to get ZTE back in business “fast.”
On Sunday, Larry Kudlow, director of the White House National Economic Council, said ZTE would not get off “scot-free.”
Kudlow also said Sunday that Trump has not completely abandoned the possibility of imposing tariffs on Chinese goods if Beijing doesnt address U.S. concerns about intellectual property theft and forced technology transfers.
“Look, I dont think were at that stage yet. … The details will be down the road. These things are not so precise. Macroeconomics plays a big role. But our view is China must open up. They must become fair traders,” Kudlow said.
Brent D. Griffiths and Christopher Cadelago contributed to this report.