The U.S. and China are backing off threats to hit each other’s exports with tariffs while they work on a larger trade agreement, Treasury Secretary Steven Mnuchin said Sunday.
“We are putting the trade war on hold. Right now we have agreed to put the tariffs on hold while we try to execute the framework,” Mnuchin told Fox News Sunday host Chris Wallace, referring to ongoing efforts by trade negotiators to reduce the U.S. trade deficit with China.
Mnuchin’s comments came a day after Washington and Beijing released a joint statement saying China would “significantly increase purchases of United States goods and services” and create a “level playing field” for competition from American companies. (RELATED: Beijing Has Agreed To ‘Substantially Reduce’ America’s Trade Deficit With China)
In trade talks on Thursday and Friday, U.S. had initially demanded a trade deficit reduction of $200 billion, which Chinese representatives reportedly rejected. The White House’s Saturday statement did not place a dollar figure on the amount of increased U.S. exports to China.
“The framework includes their agreement to substantially reduce the trade deficit by increasing their purchases of goods,” Mnuchin said, adding both sides have agreed to numerical targets but he didn’t want to reveal them yet.
This week’s trade negotiations appear to have averted, for now, a brewing trade war between the world’s two largest economies. President Donald Trump’s administration has taken a hard line on what it says are unfair trade practices by the Chinese government, proposing about $50 billion worth of tariffs on products and technology that advance Beijing’s industrial development goals.
Trump also slapped tariffs of 25 percent on steel and 10 percent on aluminium — a move aimed squarely at Chinese producers. Beijing has hit back with its own tariffs on a range of U.S. products, including wine, pork, soybeans and chemicals.
Behind the scenes, however, the Trump administration’s trade negotiators have been meeting with their Chinese counterparts in an effort to ratchet down tensions. The negotiations were “going well,” and Trump’s chief economic advisor, Larry Kudlow, is “optimistic” about reaching an agreement with Beijing, Kudlow said Friday.
“China’s come to trade; they’re meeting many of our demands,” Kudlow told reporters, according to CNBC. “There’s no deal yet, to be sure, and it’s going to probably take a while. It’s a process. But they’re coming to play. I believe they want to make a deal.”
In addition to tariff reductions, Trump’s administration is also pushing for changes to onerous requirements China places on U.S. companies wanting to operate there. Beijing currently requires American firms to enter into joint ventures with Chinese companies — often under pressure to turn over their intellectual property in exchange for market access.
Chinese telecommunications giant ZTE has also factored into the trade negotiations. The company was dealt a blow in April, when the Commerce Department imposed a seven-year ban on sales of American-made components to ZTE in connection with its violation of U.S. sanctions on Iran.
The ban could be lifted if China rescinds some tariffs on American agricultural products, Trump has suggested. The proposal has stirred concerns among some U.S. lawmakers about the national security implications of helping a Chinese state-owned company get back on its feet, but Trump has said doing so could help facilitate a “larger trade deal.”
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