“I have every expectation if there’s not a deal those tariffs will go in place”, Steve Mnuchin told CNBC on Monday, following reports that Beijing is angling to have the Trump administration scrap plans to hike tariffs on an additional $160 billion in Chinese goods as part of the “Phase One” trade “deal” Donald Trump touted in the Oval Office with Liu He on Friday.
US stocks pared gains into the close late last week when the nebulous handshake agreement (there is still nothing in writing) produced no definitive answer on those prospective duties.
“But I expect we’ll have a deal”, Mnuchin went on to say.
His remarks came hours after reports suggested Beijing harbors considerable doubts. Over the weekend, state media in China described the agreement as little more than a bilateral arrangement that paves the way for more substantive talks.
Meanwhile, Global Times Editor Hu Xijin (who tweets on behalf of the Party), appeared to try and improve the optics on Monday.
“Based on what I know, China-US trade talks made [a] breakthrough last week and the two sides have the strong will to reach a final deal”, he tweeted. “[The] initial statement of the Chinese side is moderate. This is China’s habit. It doesn’t mean China’s real attitude is not positive”, he added.
The threatened December 15 tariffs are generally seen as a key point of leverage for Donald Trump in his efforts to compel the Fed to stick to its easing bias.
The levies would go into effect right around the December FOMC meeting. As a reminder, they would include key consumer goods, and would amount to taxing US shoppers during the holiday season, even if the effect likely wouldn’t be felt until later.
Mnuchin described the talks held in Washington last week as addressing “very significant structural issues”. That’s a questionable characterization. All the evidence suggests the thorniest of thorny structural sticking points (including state subsidies, Huawei and national security) were left largely untouched.
CNBC’s Kayla Tausche summarized Mnuchin’s account of next steps as follows:
- Principal-level call next week
- Deputies will meet between now and Chile
- Mnuchin, Lighthizer, Liu meet in Chile before leaders
- Trump, Xi meet to finalize deal
Nothing could go wrong.