WASHINGTON (REUTERS) - The US trade war with China is "on hold" after the world's largest economies agreed to drop their tariff threats while they work on a wider trade agreement, US Treasury Secretary Steven Mnuchin said on Sunday (May 20).
Mnuchin and US President Donald Trump's top economic adviser, Larry Kudlow, said the agreement reached by Chinese and American negotiators on Saturday (May 19) set up a framework for addressing trade imbalances in the future.
"We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework," Mnuchin said in a television interview on Fox News Sunday.
On Saturday, Beijing and Washington said they would keep talking about measures under which China would import more energy and agricultural commodities from the United States to narrow the US$335 billion (S$450 billion) annual US goods and services trade deficit with China.
During an initial round of talks this month in Beijing, Washington demanded that China reduce its trade surplus by US$200 billion. No dollar figure was cited in the countries' joint statement on Saturday.
The Chinese Embassy in Washington did not return a request for comment on Mnuchin's statement.
Tension between the two sides has been growing since the Trump administration proposed tariffs of US$50 billion on Chinese goods and said it might extend the levies to an additional US$150 billion.
China responded with its own measures targeting US agriculture.
In response to Mnuchin's comments, Democratic Senator Chuck Schumer of New York, a frequent Trump critic, said he thought it would be a mistake for Trump to settle for "a promise to buy goods" with so many larger issues on the table.
"If President Xi is going...to fail to take strong actions on intellectual property, cyber theft, and American companies having free access to sell goods in China...we will have lost,"Schumer said.
Kudlow told CBS Face the Nation it was too soon to lock in the US$200 billion figure for China's promised purchases.
"The details will be down the road. These things are not so precise," he said.
In addition, he told ABC's This Week that the broader issues were still in play, and that China had "structural reforms" such as lowering tariffs and non-tariff barriers that will allow the United States to boost exports.
Trump was in a "very positive mood about this," Kudlow said.
However, he said there was no trade deal yet reached.
"There's no agreement for a deal," Kudlow told ABC. "We never anticipated one. There's a communique between the two great countries, that's all. And in that communique, you can see where we're going next."
One next step will be dispatching Commerce Secretary Wilbur Ross to China to look at areas where there will be significant increases, including energy, liquefied natural gas, agriculture and manufacturing, Mnuchin and Kudlow said.
Mnuchin said the United States expects to see a big increase of between 35 per cent and 40 per cent in agricultural exports to China this year alone and a doubling of energy purchases over the next three to five years.
"We have specific targets. I am not going to publicly disclose what they are. They go industry by industry," Mnuchin said.
Saturday's statement made no mention of whether there would be a relaxation of paralysing restrictions on Chinese telecommunications equipment maker ZTE Corp imposed last month by the US Commerce Department.
The action was related to violation of US sanctions on Iran and North Korea and banned American companies from selling semiconductors and other components to ZTE, causing the Shenzhen-based company to cease most operations.
Trump said last week he had directed Ross to put ZTE back in business, but Kudlow said any changes would be minimal.
"If any of the remedies are altered they are still going to be very, very, tough, including big fines, compliance measures, new management, new boards," he said. "Do not expect ZTE to get off scot-free. Ain't going to happen."