The Trump administration is not going to impose 25 percent tariffs on $150 billion of Chinese imports, at least for now. Treasury Secretary Steven Mnuchin said that the administration will hold off on imposing tariffs, as leaders of both countries try to find an agreement on trade, Politico reported today.
"We're putting the trade war on hold right now, we have agreed to put the tariffs on hold while we try to execute the framework."The U.S. trade deficit with China reached a record high of $375 billion in 2017. Donald Trump's administration asked China to commit to the goal of reducing it to $137 billion by 2020.
"China will significantly increase purchases of United States goods and services," a joint U.S.-China statement released yesterday read, without specifying how much China would buy from America and when.
According to Politico, Mnuchin said that the U.S. expects a 35 to 40 percent increases this year, in agriculture alone. In energy, there should be a $50 to $60 billion a year of energy purchases a year, Treasury Secretary added, denying to confirm whether China had agreed to a specific commitment or not.
According to Reason, two major developments have influenced this shift. The release of the joint statement was the first. The meeting between the Office of the U.S. Trade Representative with dozens of American business owners was the second.
This meeting lasted for three days and, according to Reason, American business owners openly expressed their anger and frustration with the tariffs, claiming they would do significant damage to the American economy.
According to Reason's Eric Boehm, although Donald Trump has repeatedly expressed concerns about America's trade war with China, his opinion is deeply rooted in economic illiteracy.
Russ Roberts, a George Mason University economist, echoed Boehm's sentiment, telling Reason the following.
"It is certainly true that China doesn't play fairly in the economic game of international trade. But not because we run a trade deficit with them. That's not a result of unfairness. That's the result of the fact that we, in general, import more stuff from the rest of the world than they import from us, and at the same time they invest more in the United States than we invest in their countries."Although Donald Trump has been remarkably consistent on international trade, his views have been consistently wrong, Boehm argued, adding that his hostility toward China fits with the rest of the nationalist economic rhetoric Trump had used to climb the top of the Republican Party's hierarchy.
An administration official confirmed to Politico that President Trump is indeed backing off, but wants to keep the possibility of tariffs on China alive, despite being satisfied with the progress his administration has made. The President is, the source said, willing to tone down his rhetoric as talks with China continue.