News and Music Discovery
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

U.S., China Step Back From Trade Dispute


To policymaking now, where President Trump is hoping to fundamentally alter U.S. trade relationships. Trump met last week with one of China's top economic officials, and Treasury Secretary Steven Mnuchin says they made, quote, "very meaningful progress" towards heading off a trade war. Trump had threatened to impose steep tariffs on Chinese goods, and Beijing warned of retaliation with tariffs on U.S. exports. But now it looks like those tensions might be easing. Mnuchin told Fox News Sunday the two countries are working on a framework of a broader economic deal.


STEVEN MNUCHIN: We're putting the trade war on hold. So right now, we are - we have agreed to put the tariffs on hold while we try to execute the framework.

GONYEA: NPR's Scott Horsley joins us now. Scott, welcome.

SCOTT HORSLEY, BYLINE: Good to be with you, Don.

GONYEA: Scott, this news follows two days of intense trade negotiations between the U.S. and China here in Washington. What did those talks produce?

HORSLEY: There is a tentative agreement, Don, to boost China's imports of U.S. ag products and energy products, but there was no firm commitment from China. There's no specified dollar amount. And while there was some discussion of greater intellectual property protection, there was no firm agreement from China to change its ways and stop forcing U.S. companies to share their technological know-how as the price of doing business in China. Now, that was the issue, not the trade deficit that was ostensibly the rationale behind the U.S. threat to hit China with those steep tariffs.

GONYEA: So if we have this cease-fire, is that a victory for the Trump administration at this point?

HORSLEY: Well, the White House will certainly try to spin it that way. And it is good for energy exporters and for U.S. farmers - the farmers who had been bearing the brunt of the trade skirmish thus far. But it doesn't really make a meaningful dent in that trade deficit that the president's always complaining about.

Just to give you some perspective, Don, the U.S. exports just over $20 billion a year in farm products to China. Oil and gas exports might add another $10 billion a year. So if you doubled energy exports, and if you boosted farm exports by 40 percent, as Secretary Mnuchin has talked about doing, you'd be shaving maybe $15, $20 billion a year off the trade deficit - nowhere near the $200 billion reduction that the president says he wants.

Now, China would be happy to spend a little extra money rather than making more fundamental changes in its economic model. Critics worry that China's getting off too easily. Scott Paul is one of those critics. He represents a consortium of steel companies and the steelworkers union.


SCOTT PAUL: I don't think that achieving some sort of a one-off agreement where China agrees to buy more U.S. products in sensitive industries like agriculture or aerospace is a substitute for getting lasting, binding commitments for China to end its myriad unfair trade practices.

HORSLEY: Paul and other trade skeptics would like to see the administration drive a harder bargain here.

GONYEA: Does China have some extra leverage because the U.S. needs them to help out on the whole North Korea nuclear talks?

HORSLEY: Oh, absolutely. You know, China is North Korea's No. 1 trading partner, and they've been a key player in putting maximum pressure on Kim Jong Un, bringing him to the bargaining table. Trump needs China's help to keep the heat on Kim, and the president's acknowledged he's willing to give China more favorable trade terms in exchange for that cooperation.

GONYEA: Let's switch gears to this continent - NAFTA - the North American Free Trade Agreement. There are talks going on there driven by White House discontent with the existing trade relationship with Mexico and Canada. They're trying to negotiate a new NAFTA. They missed a deadline last week. What's going on?

HORSLEY: This was a deadline set by House Speaker Paul Ryan, who says the administration needs to put something on paper quickly if they want a vote this year. Both Mexico and Canada have said they think it's possible to strike a deal in the near future. But Trump's trade representative says the parties are still nowhere near striking an agreement. That means any NAFTA agreement, if it happens, might float off into 2019. And, depending on what happens in the midterm elections, we could be looking at a very different Congress that's set to review that.

GONYEA: That is NPR's White House correspondent Scott Horsley.

Thanks, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.