Treasury Secretary Steven Mnuchin said there is “a level of risk” that the tariff dispute between the United States and China will erupt into a full-scale trade war, though he’s “cautiously optimistic” that the world’s two largest economies will resolve differences through negotiations.
“This has been very well-organized. Our strategy is very clear,” Mnuchin said April 6 in an interview with CNBC. “I’m cautiously optimistic we’ll be able to work it out.”
Mnuchin added “there is a level of risk that we could get into a trade war.”
The treasury secretary said he wasn’t concerned that China would retaliate by making it harder for the United States to finance deficits just as the administration’s tax cuts increase the federal government’s borrowing needs. China owns almost $1.2 trillion of U.S. government debt.
“I’m not concerned about that,” Mnuchin said. “There are lots of buyers around the world for U.S. debt.”
President Donald Trump on April 5 instructed the U.S. Trade Representative’s Office to consider tariffs on an additional $100 billion in Chinese imports, bringing to $150 billion the range of Chinese products under consideration. China has said it will respond proportionately and has so far proposed duties on $50 billion in U.S. products, including aircraft and soybeans.
“We think that was unfairly targeting our industries,” Mnuchin told CNBC. “We will protect our farmers from unfair targeting.”
Trump said earlier April 6 that the spat with China may hurt the markets in the short term, but America will emerge stronger from it.
“I’m not saying there won’t be a little pain,” Trump said during an interview on 77 WABC Radio’ “Bernie & Sid in the Morning” program. “So we might lose a little of it, but we’re going to have a much stronger country when we’re finished, and that’s what I’m all about.’”
Mnuchin, in the CNBC interview, said the U.S. doesn’t want to be in a trade war with China and is willing to negotiate over tit-for-tat tariff threats between the nations that have escalated this week.
“On the one hand, we are willing to continue negotiations. On the other hand, the president is absolutely prepared to defend our interests,” Mnuchin said.