US, Chinese officials try to head off trade war

Thursday, 17 May, 2018

A long-standing rift between Treasury Secretary Steven Mnuchin and the President's nationalist trade adviser Peter Navarro hit new levels on the sidelines of trade talks in Beijing earlier this month.

The White House did not list Navarro, National Economic Council Director Larry Kudlow or Everett Eissenstat, the NEC's deputy director for global economics, on the list of principal participants for the talks. Navarro, who is the voice of protectionist trade policies inside the Trump administration, grew frustrated with the direction Mnuchin was taking at the talks and was upset that other officials were getting shut out of meetings with the Chinese in favor of Mnuchin engaging in one-on-one talks with China's Vice Premier Liu He, the sources said. The discord creates a window for Chinese leaders to try to play advisers off each other during sensitive trade negotiations between the world's two largest economies.

The escalation in Navarro and Mnuchin's feud comes amid continued disagreements inside the administration over the future of its economic and trade policies.

Navarro has much more strident views on China's trade history, ones that Trump has often agreed with.

Bloomberg reported on Wednesday that White House trade adviser Peter Navarro was excluded from the talks. But as the China discussions have intensified, Navarro and Mnuchin have been warring behind the scenes, with Mnuchin asserting himself as the key interlocutor and Navarro finding himself boxed out. China has counterpunched by targeting $50 billion in US products.

The comments followed Mr Trump's surprise announcement on Sunday that the administration was exploring ways to soften the blow from a ban on exporting crucial USA technology to the company, which Washington says violated sanctions and misled United States officials.

The Commerce Department in April imposed such severe restrictions on ZTE that the firm could have been forced to close, enraging Chinese leaders. But with China pressing for relief, Trump agreed to help them out, hoping it would ease trade talks.

His shift away from a lead role in the talks now comes amid a growing rift over trade policy with Mnuchin, who has favored more achievable deals to open China's economy to U.S. firms and ease tariff threats, Reuters noted.

According to press reports, Mr Navarro sparred with Mr Mnuchin over his handling of the China talks and was barred from attending the meetings this week. But the status of these meetings remains in flux, one senior administration official said, and more names could be added, particularly if Trump intervenes. China has threatened to retaliate for the tariffs, which could be imposed after a public comment period ends May 22.