WASHINGTON: The Trump administration hit Chinese telecoms giant Huawei with severe sanctions on Wednesday, adding another incendiary element to the US-China trade dispute just as Treasury Secretary Steven Mnuchin said he would visit China soon for more talks. The Commerce Department said it was adding Huawei Technologies Co Ltd and 70 affiliates to its "Entity List" - a move that bans the company from acquiring components and technology from US firms without government approval.
Commerce Secretary Wilbur Ross said in a statement that President Donald Trump backed the decision to "prevent American technology from being used by foreign-owned entities in ways that potentially undermine US national security or foreign policy interests." Trump earlier in the day signed an executive order barring US companies from using telecommunications equipment made by firms deemed to pose a national security risk.
While the order did not specifically name any country or company, US officials have previously labelled Huawei a "threat" and lobbied allies not to use Huawei network equipment in next-generation 5G networks. Speaking at a US Senate Appropriations subcommittee hearing, Mnuchin characterized two days of high-level talks with Chinese officials in Washington last week as constructive.
"My expectation is that we will go to Beijing at some point in the near future to continue those discussions," he said. "There`s still a lot of work to do." He did not say when his China trip might take place. The Trump administration`s rhetoric toward China had cooled in recent days after another round of tit-for-tat tariffs between the world`s two largest economies and a selloff on global stock markets.
On Tuesday, Trump denied talks with China had collapsed and sounded an optimistic note about the chance of a deal, saying he had an "extraordinary" relationship with Chinese President Xi Jinping, whom he plans to meet at a G20 summit in Japan next month. Trump also urged China to buy more US farm products.
US agricultural goods have been targeted by China`s retaliatory tariffs, and American farmers, a key political constituency for Trump, are worried. The US Department of Agriculture has paid $8.52 billion directly to farmers as part of a 2018 aid program designed to offset losses from tariffs imposed by China and other trading partners, a spokesman for the agency said on Wednesday. The Trump administration had pledged up to $12 billion in aid to help offset losses resulting from Chinese tariffs.
Trump, who has embraced protectionism as part of an "America First" agenda, has railed against what many US and European officials and companies describe as China`s unfair trade practices, including forced technology transfers and intellectual property theft. But trading partners and close allies in Europe, North America and Asia are also in the US administration`s sights.
Mnuchin said the United States was close to resolving a dispute over steel and aluminium tariffs imposed on Canada and Mexico last year as the three countries renegotiated the North American Free Trade Agreement (NAFTA). US Trade Representative Robert Lighthizer met with Canadian Foreign Minister Chrystia Freeland in Washington on Wednesday to discuss the tariffs and other issues related to the US-Mexico Canada Agreement (USMCA), which replaced NAFTA. The three countries have not yet ratified the new deal.
After her meeting with Lighthizer, Freeland declined to say whether the two countries were close to a deal. But she told reporters later that ratification of the agreement would be difficult as long as the tariffs remain in place. "When it comes to Canada it has still been the case for us that as long as the tariffs remain in place ratification would be very, very problematic," she said on Capitol Hill.
Jesus Seade, Mexican deputy foreign minister for North America, told Reuters on Wednesday that Mexico was close to resolving its part in the tariffs dispute but wanted Canada to be in a similar position before completing the deal. Three Trump administration officials told Reuters that Trump was expected to delay a decision on imposing tariffs on imported cars and parts by up to six months, avoiding opening yet another front in his global trade battles. The decision to delay was expected to be made on Friday, officials and automakers said.
The tariffs of up to 25 per cent on cars and parts could have a devastating impact on Japan and countries in the European Union, particularly Germany. Global stock markets, which have swooned in the past week over the rising trade tensions, gained ground on Wednesday after the reports of the planned delay.