Treasury Secretary Steven Mnuchin said that U.S. tariffs on Chinese goods might not be automatically removed even in a “phase two” trade agreement with China, a statement at odds with Beijing’s demands for relief.
Mnuchin told the Wall Street Journal Tuesday that a follow-up deal with Beijing won’t automatically be a “big bang” that scraps existing levies on Chinese goods. Instead, he indicated, it might take successive phases of agreements to undo the tariffs. “We may do 2A, and some of the tariffs come off. We can do this sequentially along the way,” he said while in Davos, Switzerland, to attend the World Economic Forum.
President Trump signed “phase one” of a trade deal with Beijing last week that covered financial services, currency manipulation, intellectual property rights, and forced transfers of technology, and required Beijing to purchase $200 billion in U.S. goods and services.
The Trump administration reduced some tariffs on Chinese goods and held off on imposing others as part of the “phase one” deal. It nevertheless has maintained 7.5% tariffs on $120 billion worth of Chinese goods and 25% tariffs on another $250 billion worth of products. The administration has said the tariffs are needed to ensure that China abides by the terms of the deal. China has tariffs of between 5% to 25% on $185 billion worth of U.S. goods.
The president has said he would travel to China this year as part of the deal’s “phase two” negotiations, which are expected to cover China’s business subsidies and its hacking of U.S. companies, among other issues. Beijing has said repeatedly that further progress is predicated on additional tariff relief but has left open what process would be used accomplish that goal.
[Read more: Mnuchin threatens tariffs if UK and Italy tax tech companies]
