Smiles, warnings and rhetoric from the ‘Wild West’
US ‘allies’ furious with steel and aluminum tariffs at G7 meeting while China and the US try to grind out a deal in Beijing
Wilbur Ross sounded upbeat on Sunday after having dinner the previous evening with China’s Vice-Premier Liu He. But the United States Commerce Secretary appeared to be the only one in a positive mood.
As the trade dispute threatened to blow up into a full scale “war,” US Treasury Secretary Steven Mnuchin came under fire from the European Union at the Group of Seven, or G7, meeting of finance leaders in the Canadian ski resort of Whistler.
At the center of the row was the White House’s decision to slap tariffs on steel and aluminum produced by key US allies in the EU and Canada. The mood was described as “hostile.”
Yet nearly 8,450 kilometers away in Beijing, the atmosphere appeared to be more cordial. “Our meetings so far have been friendly and frank, and covered some useful topics about specific export items,” Ross told the media after dining with Liu on Saturday evening.
Less than 12 hours later, an agreement appeared to have been reached as discussions were wrapped up, according to China’s official news agency Xinhua, although precious details were missing from the communique.
Instead, the short statement referred to last month’s “consensus” reached in Washington.
“To implement the consensus reached in Washington, the two sides have had good communication in various areas such as agriculture and energy, and have made positive and concrete progress,” Xinhua reported, adding that “details” would be subject to “final confirmation by both parties.”
“The achievements reached by China and the United States should be based on the premise that the two sides should meet each other halfway and not fight a trade war,” it added.
Still, Beijing warned that any deal would be void if Washington went ahead with proposed tariffs.
Earlier, Mnuchin had pointed to a rocky road ahead for the US, which is now embroiled in trade disputes on two fronts, after talking about Washington’s China policy.
He reiterated at the G7 President Donald Trump’s aim to radically change the relationship between the White House and Beijing, including forced technology transfers in joint ventures.
“I want to be clear, this isn’t just about [China] buying more goods, this is about structural changes,” Mnuchin said.
“But I also fundamentally believe that if there are structural changes that allow our companies to compete fairly, by definition, that will deal with the trade deficit alone.”
Between January and March, the “deficit” stood at US$58 billion, while last year it was a record $375.2 billion.
Trump has pledged to reduce this as well as curtailing President Xi Jinping’s “Made in China 2025” program, which will turn the world’s second-largest economy into a technological powerhouse.
Indeed, this has caused consternation in Beijing and is regarded as a ‘red line’ for the ruling Communist Party.
“China will take firm and strong measures to safeguard our legitimate benefits,” Foreign Ministry spokesperson Hua Chunying confirmed earlier this week.
Before Ross arrived with his team for the two-day talks, the US and China had threatened tit-for-tat tariffs on goods worth up to $150 billion each.
Last week, the Trump administration then announced it would roll out duties on Chinese imports worth $50 billion, mainly from the technology sector.
“China has demonstrated that it does not want a trade war, while at the same time revealing that it is not afraid of one either,” the state-run Global Times, which is run by the Communist Party’s mouthpiece, the People’s Daily, said in an editorial. “China’s attitude on a trade war remains the same and will always be consistent.”
Anger at G7
There was also anger at the G7 meeting of finance ministers after last weekend’s decision by the US to impose 25% steel tariffs and 10% aluminum duty on the EU, Canada and Mexico.
French Finance Minister Bruno Le Maire compared Washington’s action to something out of the old “Wild West.”
“Global trade is not a ‘gunfight at the OK Corral,’” he said. “It’s not about who attacks whom, and then wait and see who is still standing at the end.”
Canadian Finance Minister Bill Morneau was slightly more measured.
“We’re concerned that these actions are actually not conducive to helping our economy, they actually are destructive and that is consistently held across the six countries that expressed their point of view to Secretary Mnuchin,” he told a news conference.
Even US House Speaker Paul Ryan waded into the row, insisting that the White House should be working with, and not against, its “allies.”
“[The move] targets America’s allies when we should be working with them to address the unfair trading practices of countries like China,” he told the US media.