The Trump administration is “actively” involved in talks with China to resolve trade tensions, and the U.S. has no intention of starting a trade war, a senior White House adviser said.
“We are already at the negotiating table,” Peter Navarro, a trade adviser to President Donald Trump, told Bloomberg Radio on Monday.
Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer “actively engage with the Chinese side,” Navarro said. “The problem is talk isn’t cheap with the Chinese side. It’s been very expensive” for the U.S., he added.
Trump wants to see a $100-billion reduction in America’s trade deficit with China this year, as well as action on intellectual property, Navarro said. The U.S. had a $337-billion trade shortfall in goods and services with China last year.
Trump ordered tariffs last week on $50 billion in Chinese imports after his officials concluded Beijing engages in a range of policies that violate U.S. intellectual property. The president also asked Mnuchin to come up with restrictions on Chinese investments in the U.S., details of which the Treasury secretary should announce soon, Navarro said.
Navarro dismissed warnings the global economy is on the verge of being swept up by a tit-for-tat cycle of retaliation between the world’s two biggest economies.
“Everybody needs to stop talking about trade wars and trying to push up these tensions,” he said. “We are free traders, but what the president has said is we have a structural problem in the global economy, massive trade imbalances that are fueled by unfair and nonreciprocal trade.”
The Trump administration is under growing pressure to explain the details of its trade policies after fears of a trade war between the U.S. and China sent stocks tumbling last week.
Businesses and investors are awaiting details in the coming days of the proposed product list for the tariffs on Chinese imports announced last week. While U.S. stocks fell sharply after Trump unveiled the plan, equity futures rallied Monday as investors’ immediate fears appeared to ease.
“All I see are green lights for growth,” Navarro said.
China unveiled tariffs on $3 billion of U.S. imports in response to separate U.S. steel and aluminum tariffs, and its ambassador to the U.S. said all options are on the table, though the Asian nation doesn’t want a trade war.
“There remains a huge amount of uncertainty over what happens next,” Capital Economics analysts wrote in a research note Friday. “But with the protectionists seemingly in the ascendancy in the White House, the possibility of further escalation is high.”
The president laid out the plan after the U.S. trade representative’s office concluded Beijing violates U.S. intellectual property in myriad ways, such as by forcing American companies to cough up technology to do business in China.
Meanwhile, the U.S. is still negotiating with the European Union, Argentina, Australia, Brazil, Canada and Mexico on whether those countries will be subject to steel tariffs. The White House announced last week the nations would be excluded until May 1. South Korea says it has negotiated an exemption as part of free-trade talks with Washington.
The U.S. is scheduled to resume discussions with Canada and Mexico early next month on an overhaul to the North American Free Trade Agreement, adding another potential flash point.
Amid the tumult, the administration is sending mixed signals about how far it is willing to go. Just before the China tariffs were announced, Navarro signaled a break from the diplomatic approach toward China that has defined U.S. economic policy since Richard Nixon visited the Communist nation in 1972.
But Mnuchin said Sunday he’s optimistic the U.S. can reach an agreement with China that will forestall the need to impose the tariffs that Trump has ordered.
“We’re having very productive conversations with them,” Mnuchin told “Fox News Sunday.” “I’m cautiously hopeful we reach an agreement.”
Markets responded to that hope, with the MSCI Asia Pacific Index of stocks reversing a drop Monday and the Stoxx Europe 600 Index also advancing. Futures for the S&P 500 jumped more than 1 percent, the most in more than two weeks, while contracts for the Nasdaq were set for the first gain in four days.
It’s not clear when the China tariffs will take effect. Lighthizer has 15 days from March 22 to release a proposed product list, though a U.S. trade representative fact sheet says he plans to release it as early as this week. After the list is released, there will be a 30-day comment period.
Bloomberg Economics estimates that a global trade war would cost the world economy about $470 billion by 2020, or 0.5 percent of output.
Bloomberg writers Tom Keene and Jonathan Ferro contributed to this report.
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