By Steve Herman
The White House is signaling it is not seeking to further escalate the trade war with Beijing, after the administration of President Donald Trump took the mostly symbolic action of declaring China a currency manipulator.
“We have negotiated in good faith, and we want to continue to negotiate in good faith with the Chinese,” despite disappointment with China’s negotiators not living up to earlier promises and a lack of progress, Larry Kudlow, director of the National Economic Council, told reporters on Tuesday.
“The door is open for additional negotiations,” said Kudlow. “We are planning for the Chinese team to come here in September” after the latest round of talks last week in Shanghai did not achieve a breakthrough.
Trump — if there’s a deal or progress — may reconsider some of the actions he has taken, such as reversing increased tariffs on Chinese products, added the president’s economic adviser.
Kudlow also warned additional punitive action against China could be taken by the president if no progress is achieved.
“The president is defending the American economy,” Kudlow emphasized.
Earlier in the day on Twitter, Trump promised further protection for the American agricultural sector, which has seen purchases curbed by China.
“As they have learned in the last two years,” Trump tweeted Tuesday, “our great American Farmers know that China will not be able to hurt them in that their President has stood with them and done what no other president would do — And I’ll do it again next year if necessary!”
Trump has directed billions of dollars of U.S. government aid to farmers to cover their lost revenue. He faces re-election in 2020, and farm states have been a bastion of support for him.
The Trans-Pacific trade tension, meanwhile, has roiled global markets this week.
Kudlow acknowledged the volatile trading, explaining that “these things come and go.”
After big declines Monday and two days of losses on the major Asian bourses, the key U.S. stock indexes on Tuesday all rose more than 1 percent.
The Dow Jones Industrial Average, which had its worst day of the year in the previous session, closed up 309 points.
The months-long trade war between the United States and China, the world’s two biggest economies, worsened last week when Trump announced a 10% tariff on $300 billion worth of Chinese exports to the U.S. starting Sept. 1 — in addition to earlier tariffs already imposed.
China responded by ending all new purchases of agricultural products from the United States and allowing the tightly controlled Chinese currency to devalue, giving its exporters a competitive edge in world markets.
That prompted the U.S. Treasury Department to officially designated China a currency manipulator.
Chinese officials reacted Tuesday by describing Washington’s currency manipulation action as deliberately destroying international order.
“It’s not our action. The dollar is very strong as befits the world’s reserve currency, as befits the world’s strongest economy,” said Kudlow on Tuesday when asked by VOA about the accusation made by China. “It’s their action. I must say they brought this on themselves.”
The head of the oldest farm organization in the United States is saying more needs to be done by the government to assist farmers, suggesting steps be taken to weaken the dollar.
“For years, American family farmers and ranchers have been promised that exports are the ticket to prosperity. But that hasn’t happened. Now, as a country we have decided that trade deficits matter and are concerned about our future amid factory closings and farm bankruptcies,” said National Farmers Union President Roger Johnson, a former agriculture commissioner of the state of North Dakota.
“It is time to fight back. It is time to act to realign the U.S. dollar so that U.S. products are competitive in world markets,” declared Johnson, a third-generation farmer, whose organization represents 200,000 family farmers and ranchers.
China’s central bank says the yuan exchange rate “is driven and determined by market forces,” and the exchange rate is not used as a tool to deal with trade disputes.
China has the ability to respond more severely if it desires, notes Brad Setser, a former assistant deputy secretary of treasury.
“While China has reduced imports of particularly commodities in the United States, it hasn’t stopped importing all the U.S. goods,” said Setser, a Council on Foreign Relations senior fellow. “It hasn’t directly threatened the interest of the U.S. companies in China.”
Analysts also point out that Washington has the ability to further respond by pushing the rate of the tariffs on Chinese goods even higher.