Trump Is Making Trade Less Fair
- Author: Leroy Wright May 25, 2018,
May 25, 2018, 21:23
The U.S. -China trade negotiations hit a speed bump Tuesday with President Trump saying he wasn't happy with the progress and lawmakers moving to undercut his ability to lift a ban on Chinese telecom giant ZTE Corp., which has become a key bargaining chip.
Trump said that as a favour to the Chinese president, he is taking a look at it.
In Beijing earlier this month, divisions between the free-trader and protectionist wings of the US delegation exploded, with the White House trade adviser Peter Navarro reportedly shouting and cursing at Mnuchin after being excluded from a meeting.
While President Trump remains hopeful the tentative deal will be one of the best things to happen to our nations farmers, China also has something to smile about.
U.S. President Donald Trump retreated from imposing tariffs on billions of dollars worth of Chinese goods because of White House discord over trade strategy and concern about harming negotiations with North Korea, according to people briefed on the administration's deliberations.
Speaking at the White House, Trump said United States technology firms have been hurt by a Commerce Department decision that prohibits them from selling components to ZTE.
However, ZTE will still have to face "harsh" punishment that will include changes of management and board, and possibly a fine.
According to The Wall Street Journal, the USA would lift restrictions that limit ZTE's ability to purchase United States phone parts in exchange for a major shake-up at China's second-largest phone maker.
During a trip to Beijing earlier this month, Navarro and Mnuchin argued about the US negotiating position, and Navarro wasn't deeply involved last week in negotiations with a Chinese delegation in Washington. China's trade surplus with the U.S. was a record $375 billion in 2017. The US delegation that went to China earlier this month, clearly signalled that it was not in it for just the trade. China is now committed to buy more U.S. agricultural and energy products aimed at reducing the yawning trade deficit between them. The Chinese company purchases 25 percent to 30 percent of components in its phones from US companies. Chinese Vice Premier Liu He was involved in the talks in Beijing as well as later talks in Washington, DC. Stock markets rallied the next day amid a sense that the US-China trade tensions were cooling, but Mnuchin's comments also prompted a backlash from Trump supporters and economists who argued Trump was easing the pressure on China without having achieved significant concessions.
The topic of the day is ZTE (HKG:0763, now suspended from trading), the Chinese telephony manufacturer that the American intelligence community has long had concerns about (along with other Chinese tech companies).
But analysts noted that the joint statement issued at the end of the most recent round of negotiations did not include a target for the increased purchases, despite earlier USA claims the increase could amount to as much as $200bn.
Kudlow ultimately said that he believes China wants a deal, but that the US will require a "deal that would help the USA economy and it's workforce".
Mr Trump on Monday said the potential agreement could be "one of the best things" to happen to farmers, an important part of his base that has been anxious about Chinese retaliation.