Mnuchin ‘hopeful’ truce can be reached with China on trade

WASHINGTON • Treasury Secretary Steven Mnuchin (picture) said he’s optimistic the US can reach an agreement with China that will avert the need for President Donald Trump to impose tariffs on at least US$50 billion (RM195.06 billion) of goods from the country.

“We’re having very productive conversations with them,” Mnuchin said on Fox News Sunday when discussing talks with China. “I’m cautiously hopeful we reach an agreement.”

Trump last Thursday also directed Mnuchin to propose new investment restrictions on Chinese companies within 60 days to safeguard technologies the US views as strategic. He has said he also wants a US$100 billion decrease in the US 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 the European Union 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 is conducting research on further lists of US imports subject to tariffs, which are likely to cover airplanes, computer chips and the tourism industry, China Daily reported on Saturday, citing Wei Jianguo, a former vice commerce minister.

Mnuchin said the two countries agree on reducing the deficit to some degree and are trying to “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, the Wall Street Journal reported.

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

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

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

Mnuchin’s comments on Sunday came after the administration announced a deal with South Korea that he said would limit the amount of steel imported into the US. The US trade gap in goods with China surged 8.1% 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. Stocks in Asia resumed declines yesterday, falling from Sydney to Shanghai.

Trade sanctions may have “quite serious” psychological impact on markets, former US Treasury secretary Larry Summers said in a Bloomberg Television interview in Beijing. “It’s both a matter of what actually happens in terms of tariffs and the psychology,” he said. “I hope the temperature will get taken very far down on both sides.”

A Chinese Communist Party newspaper on Saturday listed US companies that’d be “most damaged” if a trade war began — including Apple Inc, Intel Corp and Boeing Co.

Apple’s Tim Cook said at a forum in Beijing on Saturday he’s 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.” — Bloomberg