There is widespread agreement that agreements governing U.S. trade with China need to be revisited and revised. The argument is over whether to use a scalpel or sword to do the job.
According to China’s National Bureau of Statistics, China’s trade surplus with the rest of the world narrowed last month as the country’s imports increased in value by 27.6% and its export value dropped by 12.6%. China’s overall trade surplus in May totaled $24.92 billion, a month-over-month decline of $3.86 billion.
However, the surplus with the United States rose, from $22.15 billion in April to $24.58 billion in May. The Trump administration wants China to cut some $200 billion annually from its surplus with the United States and, with numbers like that, a cut of that size is nearly impossible to imagine.
The Business Roundtable, a group of CEOs representing most of the largest U.S. companies, issued a statement Friday calling on Trump to sheath the sword (tariffs) and apply the scalpel (more talks) with the Chinese:
We support the Administration’s efforts to engage in a constructive dialogue to help improve our strategically important relationship with China. Longstanding issues need to be addressed that currently limit the ability of U.S. companies to access this important market. While increasing exports from the U.S. to China is a good first step to begin this dialogue, the real work remains on negotiating the structural reforms that will lower barriers and level the playing field. This work will require focus, persistence, and a willingness to take targeted action if negotiations fail to drive a change in behavior.
The Administration should not implement tariffs under Section 301 [governing intellectual property, technology transfer, and innovation] while there continues to be willingness by China to engage on systemic changes to their market. Imposing these tariffs will likely derail these discussions, undermine our negotiating objectives and harm U.S. businesses and workers.
The Business Roundtable also warned on the use of presidential authority to impose tariffs on goods that pose a threat to U.S. national security:
It is critically important for the Administration to engage the G-7 countries and other allies constructively to assist in this effort. However, this remains difficult with the Section 232 tariffs on steel and aluminum currently in place. The Administration should terminate these tariffs, complete negotiations for a modernized NAFTA and get to the most important business of building a strong and fair-trading relationship with China.
Trump is making an abbreviated visit to the G7 talks in Montreal Friday, before leaving Saturday morning for his meeting next week in Singapore with North Korean leader Kim Jong-un. Apparently the plea from the Business Roundtable to patch up relations with the other members of the G7 is destined to fall on deaf ears. Prospects for a different outcome on the negotiations with China face a similar chance for success.