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US warns it will step up trade measures in 2018

DAVOS — Key members of the United States government have warned that America was preparing to intensify its measures to prevent what it sees as unfair trading practices around the world, but denied that this represented a slide towards a new form of “protectionism” which might damage the wider economy.

US Treasury Secretary Steven Mnuchin (L) looks on as President Donald Trump gestures during a meeting in the White House. Mr Mnuchin says the US is discussing rejoining the Trans-Pacific Partnership, more than a year after Mr Trump abruptly pulled the US out of the trade pact. Photo: The New York Times

US Treasury Secretary Steven Mnuchin (L) looks on as President Donald Trump gestures during a meeting in the White House. Mr Mnuchin says the US is discussing rejoining the Trans-Pacific Partnership, more than a year after Mr Trump abruptly pulled the US out of the trade pact. Photo: The New York Times

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DAVOS — Key members of the United States government have warned that America was preparing to intensify its measures to prevent what it sees as unfair trading practices around the world, but denied that this represented a slide towards a new form of “protectionism” which might damage the wider economy.

Speaking in Davos, Treasury Secretary Steven Mnuchin told the Financial Times that he “absolutely” expected to see an acceleration of trade measures during 2018, and said the administration was tightly co-ordinated in pursuing tougher trade policies.

“The president has been very clear that where there are big trade imbalances, we want that addressed and fixed,” he said.

“In this administration, we have excellent co-ordination on this issue . . . This is a policy issue the president is very focused on.”

At the same time, Wilbur Ross, the US commerce secretary, warned that some big trade initiatives launched in 2017 “will come to fruition” in 2018.

The Trump administration faces deadlines for presidential action in the weeks ahead on national security investigations into imports of aluminium and steel and a wide-ranging probe of China’s intellectual property regime that many in Washington expect to lead to further tariffs and a crackdown on Chinese investment.

This week it imposed its first major tariffs on imports of solar cells and washing machines.

However, both cabinet members vehemently denied that the US government’s policies had become isolationist, arguing that the administration aimed to reform a global trading system which it viewed as becoming increasingly dysfunctional.

“We don’t even like to use the word ‘protectionism’ . . . We don’t use that word,” said Mr Mnuchin.

“This is not about protectionism. This is about free and fair reciprocal trade. Anybody who wants to do trade with us on reciprocal terms is welcome to do so.”

Speaking later at a news conference in Davos on Thursday (Jan 25) morning, Mr Mnuchin said the Trump administration was not seeking trade wars but would defend its economic interests.

"We want free and fair and reciprocal trade. So I think it's very clear. We're not looking to get into trade wars. On the other hand we are looking to defend America's interests."

Asked about the risk of trade wars, Mr Ross told CNBC: "Trade war has been in place for quite a little while, the difference is the U.S. troops are now coming to the ramparts."

Speaking at the same news conference on Thursday as Mr Mnuchin, Mr Ross said: "People are using some predatory practices against us and we're not flinching from that."

Mr Ross insisted that the campaign for reform was already bearing fruit, even inside the World Trade Organization.

“It’s an old system, decades old. The world has changed, the economies have changed. The pecking order of countries has changed. Everything has changed. The WTO has not really modified its role. It needs to be updated, at best.”

He argued that there was rising agreement around the world on the need for reform. “You can’t solve a problem if you don’t acknowledge it exists. The world understands there are problems,” said Mr Ross.

The commerce secretary added that he thought much of the rest of the world was hypocritical in calls for free trade and a multilateral system.

“It’s the protectionist people — the ones who are — who do the free trade rhetoric. The ones whose behaviour is totally at odds with what they say.”

The comments by Messrs Ross and Mnuchin come as executives at global companies have expressed growing alarm in Davos about the administration’s stance on trade.

“We are all worried about a trade war,” one American chief executive said. “There has been some crazy language around.”

There is particular concern about the risk of a damaging trade war with China, since it could have wide economic consequences and complicate separate measures that the American government is taking to forge a common front with China to tackle North Korea.

However, Mr Ross said that businesses were simply expressing these concerns because they were “worried about change”.

Mr Mnuchin welcomed the moves that China was taking to step up pressure on North Korea and stressed that the sanctions which the US Treasury placed this week against Chinese banks who deal with North Korea was “directed against North Korea, not China”.

“China is doing a considerable amount, we would obviously like them to do more,” Mr Mnuchin said.

“And I would say that Russia has not done nearly enough and we would like them to continue to do more as well.” THE FINANCIAL TIMES

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