Tariff battle with China eases
President passes on confrontation over tech funding
WASHINGTON — President Donald Trump de-escalated a confrontation with China on Wednesday, dropping plans to impose strict limits on Chinese investment in U.S. technology companies and instead urging Congress to strengthen existing laws that apply to all foreign countries.
The administration’s more conciliatory stance raised at least the possibility that the two sides could work toward a negotiated end to the punishing tariffs they’re set to impose on each other’s goods beginning July 6. And it fueled a temporary rally in financial markets, which had been reeling on fears of an escalating trade war.
Stocks sank late in the day, though, after Larry Kudlow, Trump’s top economic adviser, said on Fox Business Network’s “Varney & Co.” that the administration’s policy shift should not necessarily be seen as a softening in its stance toward China.
It was unclear whether the policy shift would lead to a truce between the world’s two biggest economies, which have been edging toward a high-risk confrontation, or whether any formal negotiations might soon begin. But Kudlow told reporters that the two sides are “in communication.” And analysts said they took heart that the administration had offered some semblance of an olive branch to Beijing.
The Trump administration announced Wednesday it would work with Congress to strengthen reviews of foreign investment under the existing Committee on Foreign Investment in the United States, or CFIUS, led by Treasury Secretary Steven Mnuchin. CFIUS applies to all countries — not just China — and its reviews are conducted on a caseby-case basis.
Asked about the administration’s shift, Mnuchin told reporters, “It is not a question of whether we are focusing on China or we are not focusing on China” but an issue of using all means to address trade disputes with Beijing.
“For those who want to say this is being weak on China, the answer is no,” Mnuchin said. “The question was, What were the appropriate tools?”