Washington Wants to Seal New Trade Deal With Beijing, Ex-U.S. Treasury Secretary Says
By Kelsey Cheng
(Doha, Qatar) — Washington is likely to look to seal another trade deal with Beijing, which may include getting China to live up to the commitments it made during Trump’s first term, said former U.S. Treasury Secretary Steven Mnuchin at a conference Tuesday.
“President Trump is using tariffs to get [China] back to the negotiating table and get to another deal,” Mnuchin said during a panel at Web Summit Qatar in Doha.
“It’s a very important trading relationship. It’s been unbalanced for a long period of time. It’s a priority of President Trump to rebalance it, and I’m hopeful they can get back to the table as parts of Phase One hadn’t been adhered to, and hopefully negotiate Phase Two,” he told the media following the panel.
The two countries signed the Phase One trade deal in January 2020 during President Donald Trump’s first term, pausing a bruising trade war. The deal required China to increase its purchases of U.S. exports by at least $200 billion in 2020 and 2021 from a 2017 baseline, but Beijing purchased only 58% of the total U.S. goods and services exports that it had committed to buy over the period, partly due to the Covid-19 pandemic, according a 2022 report from the Peterson Institute for International Economics.
China has been preparing a proposal to respond to the latest U.S. tariffs that includes restoring the Phase One trade deal, the Wall Street Journal reported earlier this month, citing people familiar with the matter.
Trump’s additional 10% tariffs on all Chinese imports took effect on Feb. 4. China retaliated by imposing an 15% additional duty on coal and liquefied national gas imports from the U.S. and a 10% additional duty on other U.S. imports including crude oil and agricultural machinery.
Yet, concerns of spiraling tensions between the world’s two largest economies heightened on Friday as Trump signed a memorandum directing a high-level committee to restrict Chinese investment in strategic U.S. sectors such as technology, critical infrastructure, health care, agriculture, energy and raw materials.
The memo said that the administration will also consider new or expanded restrictions on U.S. outbound investment to China in sensitive technology sectors — including semiconductors, artificial intelligence, quantum, biotechnology and aerospace.
Calling it “discriminatory,” a Chinese Ministry of Commerce spokesperson said on Saturday that this move would severely impact economic and trade cooperation between businesses and called for the U.S. to “stop politicizing and weaponizing economic and trade issues.”
“President Trump really likes tariffs and uses them as an important source of revenue,” Mnuchin said during the Web Summit panel. “If you put a 10% tariff on everybody, that would raise about $2.5 trillion over a 10-year period.”
Those proceeds could be used to pay down debt or to fund tax cuts, Mnuchin said. He claimed that a major part of any tariff would be absorbed by the seller, meaning that it would not be passed on to U.S. consumers.
The former treasury chief served during Trump’s first term and founded Liberty Strategic Capital after leaving office in 2021, a private equity firm focusing on technology and financial services investments.
Regarding TikTok’s fate in the U.S., Mnuchin declined to reveal details of ongoing negotiations but confirmed that he is still keen in acquiring the platform.
“We’re still very interested,” he said.
“It’s a great business in the U.S., there’s no question about it. It’s one of the few things that the Republicans and Democrats could agree on,” he said, referring to the House of Representatives passing a bipartisan bill forcing ByteDance Ltd. to divest from TikTok by January 2025 or face a nationwide ban.
Trump on Jan. 20 delayed the federal ban on the short-video app for 75 days. He’s said he wants to find a solution in which the U.S. owns at least half of TikTok, which has 170 million users in the country.
The most likely solution is for the U.S. to have around a 60% ownership in TikTok, while diluting Chinese ownership to 20% or below, Mnuchin said.
Contact reporter Kelsey Cheng (kelseycheng@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
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