Mnuchin signals chance to end China tariff war

Source: By Saleha Mohsin, Bloomberg • Posted: Thursday, January 31, 2019

U.S. Treasury Secretary Steven Mnuchin said that if China presents enough trade concessions to President Trump, there is a chance that the administration may seek to lift all tariffs.

“Everything is on the table,” Mnuchin said early yesterday during an interview on Fox Business News’ “Mornings With Maria” program. The Treasury chief is set to meet with top Chinese officials in Washington today and tomorrow alongside U.S. Trade Representative Robert Lighthizer about a month before the U.S. is set to escalate the trade war with China with fresh tariffs.

Trump and China’s Xi Jinping gave their officials until March 1 to work out a deal on “structural changes” to China’s economic model. If they fail, Trump has promised to raise the tariff rate on $200 billion in Chinese imports to 25 percent from 10 percent. The collapse of talks would dash hopes of a lasting truce that would remove one of the darkest clouds hanging over the world economy.

China is facing added urgency to end the trade spat amid the weakest domestic growth since 2009.

Divisions remain within Trump’s trade team, with hawks including Lighthizer and National Trade Council Director Peter Navarro seeking tougher demands on China, and Mnuchin and White House economic adviser Larry Kudlow prioritizing preserving U.S. growth.

In a sign of the importance the White House is placing on the talks, Trump is expected to meet China’s top trade negotiator at the end of the week. In addition to U.S. demands for structural changes to China’s economy, the latest round of talks will cover Beijing’s pledge to buy more American goods.

While Mnuchin acknowledged that growth has slowed in Europe and in China, he does not expect that to impact U.S. growth. “We see no indication whatsoever of a recession on the horizon,” he said, adding that the trade dispute with China is not hurting the U.S. and that “there is still a very good case for 3 percent growth this year.”

The nonpartisan Congressional Budget Office on Monday painted a different picture of the U.S. economy. Budget deficits are seen widening and economic gains will be “muted,” slowing to 2.3 percent for this year and 1.7 percent in 2020, CBO said, adding that the burst of economic growth in 2018 fueled by Republican tax cuts will fade in the coming years, while tariffs imposed by the Trump administration may dent the economy and hit business confidence.

Kudlow on Monday disputed CBO’s forecasts.