Mnuchin: U.S. is suspending new tariffs with China during trade talks

WASHINGTON — The United States has put on hold its plan to impose sweeping tariffs on Chinese products as it presses forward with negotiations to reduce its trade deficit with Beijing, a top priority of President Donald Trump.

Steven Mnuchin, the Treasury secretary, said Sunday that the two countries had made progress as they concluded two days of intense trade negotiations in Washington late last week. The planned tariffs on $150 billion worth of Chinese goods are off the table while the talks proceed, he said.

“We’re putting the trade war on hold,” Mnuchin said on Fox News Sunday.

After finishing the talks in Washington, the two sides released a joint statement Saturday that offered little detail about what had been decided. Mnuchin said Sunday that they had agreed on a “framework” under which China would increase its purchases of U.S. goods, while putting in place “structural” changes to protect U.S. technology and to make it easier for U.S. companies to compete in China.

While U.S. officials had signaled last week that China had agreed to increase purchases by $200 billion, Mnuchin declined to confirm that figure. “We have very specific targets; I’m not going to disclose what they are,” Mnuchin said. “They go industry by industry.”

He suggested that under a deal, China would make big increases in its purchases of U.S. agricultural products and energy over the next several years.

Larry Kudlow, Trump’s chief economic adviser, said Sunday that the $200 billion number was a “rough ballpark estimate” that both sides had used. It is a figure that simply “interests the president a lot,” he said, and is not an indication that a deal of that size is imminent.

“They are offering to make structural reforms, such as lower tariffs and lowering nontariff barriers, which will permit us to export billions and billions more goods to China,” Kudlow said of China on ABC’s This Week program. “That’s the elementary point. That’s the key point.”

Economists have voiced doubts about the $200 billion figure, an amount equivalent to more than half the annual U.S. trade deficit with China. They say it would be difficult to increase U.S. exports by anything close to that figure, given structural hurdles in China and limits to how much the United States could increase its production of goods.

Mnuchin rejected the notion that the United States as part of the trade talks was revisiting its penalties on ZTE, the Chinese telecommunications company that has been crippled by a Commerce Department ban that prevents it from buying U.S. components. Mnuchin said that there had been no “quid pro quo” relating to ZTE and the trade talks, but that President Xi Jinping of China had asked Trump to consider offering relief to the company.

Trump has faced bipartisan criticism for appearing to relent on ZTE, which is accused of failing to punish employees who violated trade controls against Iran and North Korea.

Mnuchin insisted that the Trump administration was not “going easy” on China over ZTE or the trade talks. He said that Trump wanted to be “very tough” on ZTE, and that the tariffs could be put back in place if the trade negotiations collapsed. In addition, the Treasury Department is due to unveil Chinese investment restrictions this week.

“He could always decide to put the tariffs back on if China doesn’t go through with their commitments,” Mnuchin said.

Kudlow, in his appearance on ABC, suggested a path that could lead to ZTE’s revival, but said it would be arduous.

“If any of the remedies are altered, they are still going to be very, very tough, including big fines, compliance measures, new management, new boards. The question is whether there are perhaps some small changes around the edges,” Kudlow said. “I think President Trump is doing this because there’s some very good feeling between him and China.”

“Do not, please, do not expect ZTE to get off scot-free,” he added. “It ain’t going to happen.”