Mnuchin Lays Blame for Failed Trade Talks on China

Treasury Secretary Steve Mnuchin testifies on Capitol Hill in Washington, May 15, 2019. On the first day of the annual Group of 20 meeting of finance ministers in Japan, Mnuchin called on Beijing to return to talks and follow through on its commitments or face more tariffs. (Amr Alfiky/The New York Times)



By Alan Rappeport

FUKUOKA, Japan — The icy relationship between the United States and China over trade showed no signs of easing Saturday, as Treasury Secretary Steven Mnuchin called on Beijing to return to talks and follow through on its commitments or face more tariffs from President Donald Trump.


The comments came on the first day of the annual Group of 20 meeting of finance ministers in Japan and before Mnuchin’s meeting with Yi Gang, governor of the People’s Bank of China. That meeting, which is scheduled for Sunday, would be the first contact between top U.S. and Chinese economic officials since trade talks between the world’s two largest economies abruptly broke down last month.


“If they want to come back to the table and complete the deal on the terms that we were continuing to negotiate, that would be great,” Mnuchin told reporters at a briefing Saturday. “If not, as the president said, we’ll move on with tariffs.”


Trump is expected to meet with China’s top leader, Xi Jinping, at the G-20 leaders’ summit in Osaka, Japan, this month. Mnuchin said that meeting would be pivotal in determining the direction of the trade war.


Trump continues to publicly say that he is happy to impose more tariffs on China if it does not agree to his terms. The fact that Mexico yielded to Trump’s threat of more tariffs, promising Friday to take tougher measures to secure its shared border with the United States, could embolden the president further when it comes to China.


Mnuchin declined to say whether China had been negotiating in good faith, but he laid all the blame for the collapse of the talks on his Chinese counterparts.


“There’s no question where we are now, that this is a result of them backtracking on significant commitments,” Mnuchin said. “For whatever reasons they decided to do that, I’ll leave to them.”


The Treasury secretary said his meeting with Yi was not part of trade negotiations, but he acknowledged that the subject would come up. He said the meeting would have two parts: one focused on general macroeconomic issues, such as currencies, and a separate discussion about trade.


Yi said in an interview with Bloomberg News on Friday that the discussion of trade with Mnuchin would be “uncertain and difficult,” and he insisted that China could withstand a prolonged trade fight with the United States.


The United States and China have largely been at a standoff since negotiations broke down last month. The countries were unable to find a compromise on Trump’s tariffs, with the United States arguing for keeping many of them and Beijing insisting that they must come off as part of any trade deal.


The United States wants China to accelerate the opening of its market, improve protections for intellectual property and commit to big purchases of U.S. products.


But talks faltered at the beginning of May when China made significant alterations to the text of the agreement. The Trump administration had been pushing for any changes to be codified in Chinese law, but Beijing backtracked and refused to make any legal changes as part of the deal, U.S. officials said.


Since then, the two sides have only hardened their positions. China threatened to compile a blacklist of foreign companies and individuals that it considered “unreliable” and published a white paper last weekend arguing that the country would “never give in on major issues of principle.”


The Trump administration also answered harshly. In a statement June 3, the U.S. Trade Representative and the Treasury Department accused China of pursuing “a blame game misrepresenting the nature and history of trade negotiations between the two countries.”


“Our negotiating positions have been consistent throughout these talks, and China backpedaled on important elements of what the parties had agreed to,” the U.S. statement said.


Meanwhile, the Trump administration has been moving ahead with plans to impose 25% tariffs on the remaining roughly $300 billion of goods from China, and companies are becoming more concerned about the rapid increase in prices on a range of goods, including furniture, toys, mobile phones and sneakers. On June 17, a hearing is to be held in Washington to allow companies to weigh in on the impact of the tariffs.


Mnuchin said Saturday that the United States would probably complete the review process on the tariffs before Trump meets with Xi.


“President Trump hasn’t made any decisions at the moment,” Mnuchin said. “All options are on the table.”