The Trump administration won't lift new tariffs on steel and aluminum from China as part of a deal aimed at reducing the huge trade deficit with that country and addressing U.S. concerns about intellectual property theft, Treasury Secretary Steven Mnuchin told lawmakers on Tuesday.
"As it relates to China, the steel and aluminum tariffs will remain in force. Those were not part of our discussions," Mnuchin said before the Senate Appropriations Financial Services Subcommittee.
The news should please steel producers and workers who support the increased protection. But it won't help U.S. farmers because China has vowed retaliatory tariffs on about $3 billion of their exports because of the duties.
President Donald Trump imposed the new 25 percent tariff on steel and 10 percent tariff on aluminum in March after a Commerce Department investigation that concluded imports of the two metals posed a threat to national security by undermining the long-term viability of steel and aluminum production in the United States.
Trump temporarily exempted seven trading partners from the duties to give them time to agree on some other way, such as a quota, to address U.S. national security concerns about the imports. Since then, the U.S. has struck preliminary deals with South Korea, Brazil, Argentina and Australia but not with the remaining three — the European Union, Canada and Mexico.
Although China is generally blamed for creating global excess capacity in both the steel and aluminum sectors, the United States imports relatively little of the two metals from China because of anti-dumping and countervailing duties already in place, especially for steel.
Last year, the United States imported $976 million worth of steel from China, out of total imports of $29.1 billion, and $1.7 billion worth of aluminum from China, out of total imports of $17.7 billion.
The Wall Street Journal reported on Tuesday that the United States and China had agreed to the broad outlines of a deal that would lift China's retaliatory duties on U.S. agricultural products in exchange for the United States lifting a seven-year ban on Chinese telecommunications giant ZTE doing business with American firms.
That prohibition was imposed last month by the Commerce Secretary Wilbur Ross after ZTE was caught violating the terms of a $1.19 billion penalty agreement for making sales to Iran and North Korea. The ban prompted ZTE to announce earlier this month it was ceasing major business operations.
Mnuchin told Sen. Chris Coons (D-Del.) that the Trump administration was not backpedaling on ZTE, even though Trump had agreed to look into changing the penalty at the request of Chinese President Xi Jinping.
"I can't comment on what the Commerce Department is considering, but I assure you anything that they consider will take into account the very important national security issues and those will be addressed," Mnuchin said. But "the objective was not to put ZTE out of business; the objective was to make sure that they abide by our sanctions program."
Mnuchin and others in the administration have insisted that any relief for ZTE is entirely separate from the broader trade deal being discussed with China. Still, Ross has been charged with negotiating key long-term agricultural and energy contracts with Chinese companies to reduce the bilateral trade deficit.
Planning for that trip in early June comes as his department is considering what, if any, changes to make to the ZTE ban. In addition, Ross faces the challenge of boosting agricultural sales in the face of the retaliatory tariffs.
Contact Person: Mr. Olen Yu
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