The U.S. and China said Sunday they have agreed to back away from imposing tough new tariffs on each other’s exports, a day after reaching an accord calling for Beijing to buy more American goods to “substantially reduce” the huge U.S. trade deficit with China.
U.S. Treasury Secretary Steven Mnuchin told Fox News the world’s two biggest economic powers “have made very meaningful progress and we agreed on a framework” to resolve trade issues. “So right now we have agreed to put the tariffs on hold while we try to execute the framework.”
China’s state-run news agency Xinhua quoted Vice-Premier Liu He, who led Chinese negotiators in trade talks in Washington this past week, as saying, “The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other.”
Liu said the agreement was a “necessity.” But he added: “At the same time it must be realized that unfreezing the ice cannot be done in a day, solving the structural problems of the economic and trade relations between the two countries will take time.”
U.S. President Donald Trump had threatened to impose new tariffs on $150 billion worth of Chinese imports and Beijing had responded that it would do the same on American goods.
Mnuchin and White House economic adviser Larry Kudlow said U.S. Commerce Secretary Wilbur Ross would soon go to Beijing to negotiate on how China might buy more American goods to reduce the huge U.S. trade deficit with Beijing, which last year totaled $375 billion.
Although the U.S. has said it wants to reduce the trade deficit by $200 billion annually, Saturday’s agreement mentioned no specific number.
Kudlow told ABC News, “You can’t predict these numbers. We’ve made a lot of progress. You can see where we’re going next. As tariffs come down, the barriers come down, there will be more American exports.”
Kudlow said Ross will be “looking into a number of areas where we’re going to have greatly significant increases” in U.S. exports, including energy, liquefied natural gas, agriculture and manufacturing.
He said any agreement reached will be “good for American exports and good for Chinese growth.”
Mnuchin predicted a 35 to 40 percent increase in U.S. agricultural exports to China and a doubling of energy purchases over the next three to five years.
“We have specific targets,” he said. “I am not going to publicly disclose what they are. They go industry by industry.”
One contentious point of conflict between the two trading points is the fate of ZTE, the giant technology Chinese company that has bought American-made components to build its consumer electronic devices.
The U.S. fined ZTE $1.2 billion last year for violating American bans on trade with Iran and North Korea. But ZTE said recently it was shutting down its manufacturing operations because it could no longer buy the American parts after the U.S. imposed a seven-year ban on the sale of the components.
However, Trump, at the behest of Chinese President Xi Jinping, a week ago “instructed” Ross to intervene to save the company and prevent the loss of Chinese jobs.
Even so, Kudlow said, “Do not expect ZTE to get off scot free. Ain’t going to happen.”