While he dismissed the notion that the U.S. and China were already in a trade war, Treasury Secretary Steven Mnuchin said that there was “potential” for one to start. The topic of a trade war has been repeatedly in the headlines after China and President Donald Trump have proposed an escalating series of tariffs on imports to their countries.
Speaking during a Friday interview on CNBC's "Power Lunch," Mnuchin also said that he is “cautiously optimistic that we will be able to work this out,” but added that “there is a level of risk that we could get into a trade war.”
“No it’s not, and our objective is still not to be in a trade war with them,” Mnuchin responded, when CNBC’s Steve Liesman asked if the escalating tariff proposals meant that the U.S. and China were already in a trade war.
Mnuchin said that the Trump administration and the Chinese government have been communicating about trade for the past year, but he refused to say specifically whether a trade deal was in the works.
“On the one hand,” he said, “we’re absolutely willing to negotiate and not get into trade wars, but on the other hand, the president is perfectly willing to defend interests. So this is a very clear strategy.”
Mnuchin also said that China’s response of proposed tariffs on $50 billion worth of U.S. imports was disproportionate to the U.S. proposal of tariffs on the same amount of goods, since the it represented a larger fraction of U.S. exports to China.
According to Mnuchin, $50 billion is about 10 percent of the worth of all exports from China to the United States, but about 38 percent of the net worth of all exports from the United States to China. Mnuchin said that this move by China was “unfairly targeting our industries.”
On March 1, Trump announced global tariffs on all imports of steel and aluminum to the United States. China responded with tariffs on its own of $3 billion worth of U.S. imports. The Trump administration responded with a list of $50 billion in Chinese imports that could be targeted. China responded with proposed tariffs on $50 billion worth of imports from the U.S. On Thursday, Trump responded with a threat of an additional $100 billion in retaliatory tariffs.