Trump is ‘perfectly happy’ to hit China with new tariffs if Xi meeting doesn’t go well, Mnuchin says – CNBC

Mnuchin weighed in on several of the thorniest subjects thought to be separating the American and Chinese sides from a deal.

For one, he said that the issue of removing China’s so-called non-tariff barriers to foreign companies succeeding within its borders remains central to the U.S. position on the talks.

“In negotiating our agreement, one of the big parts of the agreement has always been about non-tariff barriers, is about forced technology transfer. These are very important issues to us, and critical to any agreement,” Mnuchin said. “These are issues where we’ve made a lot of progress, and any agreement we have, we’ll need to be certain that that’s included.”

American officials and businesses have long argued that China’s official and unofficial rules put non-Chinese firms at a disadvantage in the country. One of the most frequently cited examples is a “forced tech transfer” regime — in which companies are coerced into sharing their advanced technology and know-how with Chinese organizations in exchange for market access.

Trump has also suggested that he may want his negotiating teams to pick up the issue of China’s currency, but Mnuchin on Sunday dismissed the notion that Beijing is actively keeping the yuan low in an effort to win a trade advantage over the likes of the U.S.

Instead, he said, any weakness now seen in the Chinese currency is the result of downward economic pressures — in part due to Trump’s tariffs on the country.

“I do think their currency has been under pressure,” the Treasury secretary said. “There’s no question that, as we put on tariffs, people will move their manufacturing outside of China, into other areas, and that’s going to have a very negative impact on their economy. And I think you see that reflected in the currency.”

Another topic that has raised tensions between Beijing and Washington is Chinese telecommunications giant Huawei. The U.S. government has cracked down on the tech firm, effectively blacklisting it from doing business with American businesses, on the basis of claims it is a security risk. The rationale, according to the Trump administration is that the firm’s involvement in sensitive networking technology could potentially be leveraged by Beijing for spying or other malicious actions. Both China and the company have denied such a risk exists.

Mnuchin emphasized that the Huawei blacklisting is solely a national security issue, and isn’t a non-tariff front of the trade war — even though Trump has suggested that the telecom company could get wrapped into a wider deal.

“They’re separate from trade: Both we and China have acknowledged that in our discussions,” he said. “Now, of course, President Trump, when he has the meeting, to the extent he gets certain comfort on Huawei or other issues, obviously we can talk about national security issues, but these are separate issues, they’re not being linked to trade.”

He emphasized the U.S. claim — central to recruiting allies in its effort to control the spread of Huawei tech — that Trump’s prior comments do not reveal an effort to gain trade leverage over Beijing: “I think what the president is saying is, if we move forward on trade, that perhaps he’ll be willing to do certain things on Huawei if he gets comfort from China on that, and certain guarantees.”