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U.S. shelves Section 301 tariffs on Chinese goods

Treasury Secretary Steven Mnuchin says the U.S. and China have agreed to put tariffs “on hold” while they negotiate an agreement that would put a heavy emphasis on reducing the bilateral trade deficit and protecting intellectual property.

   The United States is putting its plans to impose import tariffs on between $50 billion and $60 billion annually in Chinese products back on the shelf, at least for now, according to Treasury Secretary Steven Mnuchin.
   “We’re putting the trade war on hold,” Mnuchin said on “Fox News Sunday.” “So right now, we have agreed to put the tariffs on hold while we try to execute the framework.”
   The Office of the U.S. Trade Representative (USTR) in early April released a list of more than 1,300 tariff lines for goods imported from China following an investigation into unfair intellectual property practices by the Chinese government under Section 301 of the Trade Act of 1974.
   Beijing swiftly retaliated, threatening tariffs of 25 percent on 106 items exported from the United States to China worth about $50 billion in 2017.
   Mnuchin’s remarks followed two days of meetings between trade officials from the United States and China in Washington, D.C., that also included Secretary of Commerce Wilbur L. Ross, United States Trade Representative Robert Lighthizer and Chinese State Council Vice Premier Liu He, special envoy of President Xi Jinping.
   According to an official statement from the White House, both sides agreed in those meetings to take steps to “substantially” reduce the bilateral trade imbalance between the United States and China, increase U.S. exports of agriculture and energy, and enhance protections for intellectual property.
   “To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services,” the administration said. “This will help support growth and employment in the United States.
   “Both sides attach paramount importance to intellectual property protections and agreed to strengthen cooperation,” it added. “China will advance relevant amendments to its laws and regulations in this area, including the Patent Law.”
   The White House said the United States will send a delegation to China to continue negotiations, but made no mention of taking tariffs off the table.
   “Both sides agreed to encourage two-way investment and to strive to create a fair, level playing field for competition,” the administration said. “Both sides agreed to continue to engage at high levels on these issues and to seek to resolve their economic and trade concerns in a proactive manner.”
   Mnuchin warned, however, that Trump could “always decide to put the tariffs back on if China doesn’t go through with their commitments.”
   And later Sunday, Larry Kudlow, director of the National Economic Council, told the CBS program “Face the Nation” Trump could put the threat of tariffs back into play if the negotiations don’t go his way.
   “Tariffs are part of any negotiation, and tariffs maybe have to be part of any enforcement,” Kudlow said. “You cannot do this kind of major change without using everything that’s in your quiver.”
   Lighthizer echoed those remarks, saying the United States would look to “use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations.”
    The USTR said in a statement, “Real structural change is necessary. Nothing less than the future of tens of millions of American jobs is at stake.”
   The latest developments also came after a three-day interagency hearing last week hosted by USTR at the International Trade Commission, during which representatives from major U.S. industries testified about the potential impacts of the proposed Section 301 tariffs. Although not all testimony was negative, the majority of witnesses argued against the imposition of tariffs on Chinese imports.
   And as negotiations continued between the two sides, the Trump administration late last week indicated it would possibly ease the seven-year ban on U.S. electronic component suppliers doing business with ZTE as part of the $1.19 billion in civil and criminal penalties assessed against the Chinese telecom giant in March 2017 for violating U.S. export control regulations.
   The House Appropriations Committee pushed back against this attempt by the White House to soften the Commerce Department’s ZTE enforcement action by adding an amendment to the so-called 2019 Commerce, Justice, Science (CJS) Appropriations bill, which passed by a vote of 32-19 on Friday.
   The amendment was offered by Reps. C.A. Dutch Ruppersberger, D-Md., and Rosa DeLauro, D-Conn.
  Ruppersberger’s office said the congressman was concerned that ZTE has been used by the Chinese government to “spy on Americans through the cell phone components they manufacture.” He even traveled to Hong Kong and interviewed ZTE executives before co-authoring a bipartisan report on this alleged threat while serving as then-ranking member of the House Intelligence Committee in 2012.