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21 May 2018
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| Us china trade (The Total Investment & Insurance Solutions) |
President Donald Trump on Monday hailed his administration's
temporary truce with China on trade, even as his Treasury secretary and China
struck a note of caution on the latest agreement.
After high-level talks in Washington last week, Beijing has agreed to
"substantially reduce" America's trade deficit with China.
"On China, Barriers and Tariffs to come down for first time,"
Trump tweeted.
Both sides, however, have said there are no guarantees trade tensions
are over. China hasn't said how much it's willing to reduce the U.S. trade gap.
The Trump administration had sought to slash the deficit by $200 billion.
Also left unclear is the issue of intellectual property. The U.S. has
long accused Beijing of secretly stealing U.S. technology from American
businesses. Mnuchin said Monday those issues "are part of our framework.
These things cannot be fixed overnight."
Commerce Secretary Wilbur Ross, who has been part of the U.S.
negotiating team, is expected to go to China soon to follow up on last week's
discussions.
A day after declaring the trade war "on hold," Treasury
Security Steven Mnuchin told CNBC Monday that Trump is reserving the right to
reimpose tariffs against Chinese goods if the two countries can't agree on specifics
to bring down the massive trade deficit with Beijing.
Likewise, China's foreign ministry said details still have to be worked
out.
"Given the increasing interaction between the two countries, we
cannot assure you they will not encounter more frictions or disputes in the
future," said spokesman Lu Kang.
Last year, the U.S. had a record $376 billion deficit with China in the
trade of goods; that was the largest by far with any nation.
Mnuchin has said to expect to see a big increase — 35 percent to 45
percent this year alone — in U.S. farm sales to China. Mnuchin also forecast a
doubling in sales of U.S. energy products to the Chinese market, increasing
energy exports by $50 billion to $60 billion in the next three years to five
years.
Farm sales could be key politically, as many Trump supporters in rural
states say they feared a U.S. trade war with China would hurt their export
business.
"China has agreed to buy massive amounts of ADDITIONAL
Farm/Agricultural Products - would be one of the best things to happen to our
farmers in many years!" Trump tweeted Monday.
Trade analysts were not surprised that China refused to agree to a
numerical target for cutting the trade gap, but they said the talks probably
were more successful in easing trade tensions.
"The Trump administration seems eager to engineer at minimum a
temporary peace with China to ensure a smooth run-up to the Kim-Trump summit in
June," Cornell University economist Eswar Prasad said, referring to the
June 12 meeting scheduled between President Donald Trump and North Korean
leader Kim Jong Un.
If there is success in the U.S.-China discussions, analysts suggest it
likely would involve the countries' presidents this fall before the November
elections.
"Part of the good news for markets: As long as both sides continue
to be 'constructively' engaged, imposition of additional tariffs by either side
is very unlikely," analysts at investment management firm Evercore ISI
said in a research note. "There is no reason for either side — particularly
the U.S. — to destroy the process that both sides are building, which is what
imposing tariffs would do."
Trump also pressed China to seal its border with North Korea "until
a deal is made" — an apparent reference to his upcoming summit with North
Korean leader Kim Jong Un.
His early morning tweets underscore the complexity and importance of
America's relationship with China. For months, Trump railed against China to
cut its trade surplus with the United States and threatened higher tariffs.
China counterpunched with tariffs on U.S. products, rattling the market.
Throughout, the looming trade war has overshadowed Trump's efforts to
pressure North Korea on its nuclear program. The U.S. needs China's help in
sealing its border so Pyongyang can't quietly skirt international sanctions.
"China must continue to be strong & tight on the Border of
North Korea until a deal is made," he tweeted. "The word is that
recently the Border has become much more porous and more has been filtering in.
I want this to happen, and North Korea to be VERY successful, but only after
signing!"
Last August, U.S. Trade Representative Robert Lighthizer began
investigating Beijing's strong-arm tactics to challenge U.S. technological
dominance. These include outright cybertheft of U.S. companies' trade secrets
and China's demands that American corporations hand over technology in exchange
for access to the Chinese markets.
Last month, the administration proposed tariffs on $50 billion of
Chinese imports to protest the forced technology transfers. Trump later ordered
Lighthizer to seek up to an additional $100 billion in Chinese products to tax.
China responded by targeting $50 billion in U.S. products, including
soybeans — a shot at Trump supporters in America's heartland. The prospect of
an escalating trade war has shaken financial markets and alarmed business
leaders.
In a separate controversy, the Commerce Department last month blocked
China's ZTE Corp. from importing American components for seven years, accusing
the telecommunications company of misleading U.S. regulators after it settled
charges last year of violating sanctions against Iran and North Korea.
The ban amounted to a death sentence for ZTE, which relies heavily on
U.S. parts, and the company announced that it was halting operations. A week
ago, Trump tweeted that he was working with Chinese President Xi Jinping to put
ZTE "back in business, fast." Media reports suggested that the U.S.
was offering to swap a ZTE rescue for an end to proposed Chinese tariffs on
U.S. farm products.
White House economic adviser Larry Kudlow said there could be "some
small changes around the edges" in the sanctions against ZTE. But Kudlow
added: "Do not expect ZTE to get off scot-free. It ain't gonna
happen."The Total Investment &
Insurance Solutions
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