–Mnuchin: “These tariffs will stay in place until there’s a Phase Two,”
By Denny Gulino
THE WHITE HOUSE (MaceNews) – The gray overcast above the executive mansion Tuesday is going to be followed by some sunshine Wednesday just as the Trump administration’s biggest economic achievement so far, the ceremonious signing of the “Phase One” pact with China, vies for attention with the House trigger of an impeachment trial.
After months in which President Trump demonized China by tweet, ropeline comment and the hard-edged speeches delegated to the vice president, all will be smiles in the White House as both Republicans and some like-minded Democrats gather in the East Room, demonstrating that bipartisanship is still possible on the trade aspect of foreign affairs.
Senate Majority Leader Chuck Schumer made clear Monday he thinks Trump is being too easy on China yet objections to Phase One are otherwise hard to find among politicians. There is more unease among trade analysts and academics, not about the terms of the agreement which are still unspecified in detail. The White House promises a new fact sheet Wednesday but not necessarily the full 86-pages nor the undocumented side understandings.
Bloomberg reported during the day that the remaining 25% U.S. tariffs on $250 billion in China goods along with 7.5% levies on another $120 billion worth won’t get lifted for at least another 10 months – after the presidential election – to give the administration time to assess how well China is fulfilling its pledge to spend $200 billion in the U.S. over two years. That is not part of the formal deal, nor is the understanding China will eventually end its tariffs on U.S. products.
That report took some of the fizz out of stocks but analysts suspect there’s a lot more to learn about Phase One than has been disclosed so far.
Treeasury Secretary Steven Mnuchin indicated he wasn’t entirely happy with the Bloomberg story when he “gaggled” with reporters on the White House driveway following his recording an interview for later broadcast on Fox News.
As Mace News reported at the time Tuesday evening, Mnuchin said, “I think there’s been a bunch of misinformation about this today so let me clear this up.” He continued, “The ambassador [Lighthizer] and I put out a statement. We tried to be clear. The full agreement will be released tomorrow. There are no other agreements.”
Mnuchin went on, “The only thing not being released, there is a more detailed portion of the purchase part which we thought would not be helpful for certain markets to release.
“These tariffs will stay in place until there’s a Phase Two,” he declared. “If the president gets a Phase Two quickly he’ll consider releasing tariffs as part of Phase Two. If not there won’t be any tariff relief.”
So, he said, “There’s nothing to do with the election or anything else. There’s no secret agreements.”
He added, “You’ll see tomorrow there’s a very detailed currency chapter that we negotiated. China has made very strong commitments that they would not do currency manipulation. There’ll be more transparency. This is part of the enforceable agreement.”
Based on that “and based upon the commitments going forward we got comfortable to change the designation” so China is no longer labeled as a currency manipulator.
When will Phase Two talks begin? he was asked. “We’ll see,” he answered. “We’re very focused on implementing Phase One. We’ll start Phase Two. But we’re very focused.”
He concluded, “This is an enormous achievement for the president and the economic team. This is the first time we’ll have a fully binding agreement with China with structural changes, technology protection and an additional $200 billion of purchases.”
The White House public schedule issued Tuesday night said the signing of Phase One will be at 11:30 a.m. ET in the East Room. after President Trump greets China Vice Premier Liu He in the Oval Office.
The latest primer on U.S.-China relations was the long piece in last week’s New Yorker magazine by staff writer Evan Osnos. While not critical of the White House effort, the story does point out how much of the conventional wisdom about China is flawed and the Phase One outcome far less strategic than it might appear.
China’s leaders consider controlled struggle to be at the heart of the survival of the regime, according to the people Osno interviewed, not the resolution of struggle, all embodied in a mantra of “fight, fight, talk, talk,” that goes all the way back to Mao. That suggests progress on “Phase Two,” that would address China’s state subsidies to industry competitors, may be slow to progress.
Meanwhile Capitol Hill this week begins the formal rituals of an impeachment trial, the parade of House members to the Senate, the swearing in of senators by Chief Justice John Roberts and the scheduling of the hours devoted to the trial every day – probably afternoons six days a week. Can the Senate give the USMCA successor to Nafta final passage while occupied with the trial? The answer seems to be probably.
Trials can take surprising turns no matter what the context and all eyes are on the four Republican senators seen most likely to side with Democrats to require new witness testimony: Lamar Alexander, Lisa Murkowski, Mitt Romney and Susan Collins. There are several more whose defection would not be a complete surprise. While it is still widely assumed Republicans will acquit Trump in relatively short order, until the trial ends the answer will be only tentative.
President Trump’s trip to Davos, Switzerland begins in a few days. There he will hobnob with world leaders and business executives from around the world spending $27,000 for membership in the World Economic Forum and more than that for scarce hotel rooms. The sight of a restless president sitting still and listening to experts in the breakout sessions somehow doesn’t compute. Yet for the TV networks switching between Davos and the Senate trial, it will be a memorable must-see spectacle.
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This story was updated at 8:40 p.m. ET with Secretary Mnuchin’s evening remarks
Contact this reporter: denny@macenews.com