“We’re putting the trade war on hold. So right now, we have agreed to put the tariffs on hold while we try to execute the framework," Mnuchin said on Fox News Sunday.
US President Donald Trump has threatened to impose tariffs on as much as $150 billion in Chinese imports to punish Beijing for allegedly violating American intellectual property and unfair trade practices. China vowed to retaliate with tariffs on everything from soybeans to airplanes.
Mnuchin’s remarks will be a relief to investors, who had feared the world’s two biggest economies were on the brink of an all-out trade conflict. The International Monetary Fund (IMF) has warned that a global trade war would undermine the broadest global upswing in years.
Asian stocks were set to start the week higher and S&P 500 contracts gained 0.7%, an unusually large gain for early Asian trading.
Even so, Mnuchin said Trump “can always decide to put the tariffs back on if China doesn’t go through with their commitments." Other members of the administration said duties are still an option if needed to get China to change its practices.
“As this process continues, the United States may use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations," US trade representative Robert Lighthizer said in a statement. “Real structural change is necessary. Nothing less than the future of tens of millions of American jobs is at stake."
Asked on CBS’s Face the Nation Sunday whether Trump has taken the threat of tariffs off the table, Larry Kudlow, the president’s top economic adviser, said, “I don’t think we’re at that stage yet."
“Tariffs are part of any negotiation, and tariffs maybe have to be part of any enforcement," Kudlow said. “You cannot do this kind of major change without using everything that’s in your quiver."
It’s also not clear how long any truce will last. Trump has often switched his position on trade issues. He has frequently declared that talks on a new North American Free Trade Agreement (NAFTA) are going well, for example, only to threaten again to withdraw from the pact.
Mnuchin’s comments came after the two nations on Saturday released a joint statement in which China proposed to “significantly increase purchases" of US goods.
The statement released by the White House didn’t place a dollar figure on the increased purchases by China, or address a comment on Friday by Kudlow suggesting that Beijing had agreed to slash its annual trade surplus with the US by $200 billion. The US had a $376 billion trade deficit in goods with China last year. The shortfall was $337 billion when services are added.
Kudlow on Sunday downplayed the significance of the $200 billion figure, saying on CBS that “maybe I got ahead of the curve" and during a separate interview on ABC’s This Week that “both sides have used that as a rough ballpark estimate."
Vice premier Liu He, a special envoy of China’s President Xi Jinping, told reporters in Washington that talks with Mnuchin, secretary of commerce Wilbur Ross and Lighthizer ended with a pledge not to engage in a trade war, according to a Xinhua news agency report.
“We made very meaningful progress and we agreed on a framework. The framework includes their agreement to substantially reduce the trade deficit by increasing their purchases of goods," Mnuchin said. He said the two sides have agreed to numerical targets but he didn’t want to disclose them.
The Chinese are offering to make structural reforms such as lowering tariffs and other import barriers that will allow the US to export “billions and billions" of additional goods to China, Kudlow said on ABC.
“We made a lot of progress here in Washington and built on what happened in China," Kudlow said. “The president is in a very positive mood about this. I myself am very encouraged."
The joint statement between the two nations said both sides agreed on “meaningful increases" in US agriculture and energy exports and that the US will send a team to China to work out the details. Kudlow said Ross is going to the Asian nation and will be “looking into a number of areas where we’re going to have greatly, significant increases," including energy, agriculture and manufacturing.
Even so, US lawmakers will probably have pointed questions about what the administration has agreed to give up in exchange for a truce with China. In a major reversal, Trump instructed his administration last week to come up with a penalty against Chinese telecom-equipment maker ZTE Corp. that allows the company to stay in business. The commerce department had banned ZTE from receiving imports from its US suppliers, a move that crippled ZTE.
The administration would face a “real backlash" if it offers concessions to ZTE as part of the trade talks, Republican senator Lindsey Graham told Fox News.
Kudlow said on ABC that while there may be “perhaps some small changes around the edges" in US action on ZTE, there will still be big fines and other remedies and “do not expect ZTE to get off scot-free. It ain’t gonna happen."
During the trade talks, the delegations discussed expanding trade in manufactured goods, and each side agreed to strengthen cooperation on intellectual property. China will “advance relevant amendments" to its laws and regulations in that area, including its patent law, the White House said.
“If we can fix the technology stealing, which is so important in this China story, and we can get these market openings, this will be good for American export sales," Kudlow said on ABC. “I think it’s good for Chinese growth. We will have come a long way."
The White House joint statement didn’t mention additional US demands, including a halt to subsidies and other government support for the Made in China 2025 plan that targets strategic industries from robotics to new-energy vehicles. China had made its own demands, including giving equal treatment to its investment, and warned US companies may be excluded from measures to open its economy.
“This round of talks is generally positive," said Li Yong, a senior fellow at the China Association of International Trade in Beijing, adding that the US still may take a harder line on reviews of Chinese investments. “Trade tensions will ease gradually, but there still could be frictions."