Report: China Sought to Promote Steve Mnuchin in Trade Negotiations

US singled out by G7 allies over steel and aluminum tariffs
The Associated Press

China welcomed the rise of Treasury Secretary Steven Mnuchin as the lead negotiator on trade issues, according to the Wall Street Journal.

The Trump administration has rapidly shifted its stance on trade with China in recent weeks, in large part reflecting who had President Donald Trump’s ear on trade issues.

According to the Wall Street Journal, China was pushing for Mnuchin to take the lead in the negotiations.

The two sides felt they made enough progress that Mr. Liu came to Washington on May 15. This time, Mr. Mnuchin was in charge. A White House statement said Mr. Mnuchin “will lead the discussions”—and didn’t include Mr. Navarro in the delegation.

That was the formulation the Chinese were seeking. In Beijing, Chinese officials built up Mr. Mnuchin, telling visiting foreign business leaders how constructive he had been in trying to ease the trade conflict.

But Mnuchin’s rise didn’t last long. After the meetings in Washington, Treasury Secretary Steven Mnuchin announced that trade war with China was “on hold” only to have the administration announce a short while later that it was preparing the apply tariffs to $50 billion of Chinese technology imports.

On the last day of the meeting, Trump gathered a small group of U.S. negotiators and told them his wanted specific commitments from the Chinese rather than vague promises to buy more U.S. goods. That meeting marked the reversal of Mnuchin’s fortunes, according to the Wall Street Journal. Now U.S. Trade Representative Robert Lighthizer has the reins.

Before the May 22 meeting, Mr. Mnuchin was ascendant. He was pursuing a market-calming strategy of negotiating with China to increase purchases of U.S. goods and services and decrease import barriers, while putting aside, for the moment, the threat of sanctions.

Now his star has fallen and Mr. Lighthizer’s has risen. Mr. Lighthizer, who favors a get-tough approach with China and other nations, is moving ahead with tariffs as a way to force China to make more fundamental changes to its economy. He wants China to reduce subsidies and other aid to Chinese firms competing internationally in advanced technology.

In other words, the hawks are back in the drivers seat.

For now.