US, China putting trade war on hold, Treasury's Mnuchin says

WASHINGTON, May 20 (Reuters) - The U.S. trade war with China is "on hold" after the world's largest economies agreed to drop their tariff threats while they work on a wider trade agreement, U.S. Treasury Secretary Steven Mnuchin said on Sunday.

Mnuchin and U.S. President Donald Trump's top economic adviser, Larry Kudlow, said the agreement reached by Chinese and American negotiators on Saturday set up a framework for addressing trade imbalances in the future.

"We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework," Mnuchin said in a television interview on "Fox News Sunday."

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Impact of trade tensions between US and China
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Impact of trade tensions between US and China

Head chef Liang Xin poses with a piece of beef imported from the U.S. in the kitchen at Wolfgang's, a high-end steak house in East Beijing's Sanlitun district, China, April 6, 2018. Liang said U.S. beef has always been limited in China, so he doesn't know how customers would react if the restaurant has to raise prices.

(REUTERS/Thomas Peter)

Liu Anqi rolls dough in flour made from imported grain at the baking studio she runs with friends, in Beijing, China, April 12, 2018. Liu has just opened a bakery in Beijing with her friend. She also teaches customers how to make cakes with a brand of flour that uses only wheat from the United States and Canada. "Flour is one of the most important ingredients in baking and its quality varies with different brands," Liu said, adding that finding a new brand would be time-consuming and higher taxes on this wheat would force her to raise cake prices and tuition fees, which could turn customers away. 

(REUTERS/Thomas Peter)

A detail of the Harley-Davidson brand name is photographed on the motorcycle of Guo Qingshan in his village outside Beijing, China, April 7, 2018. "I love the sound of the engine and the muscle of the motor. When I ride it, I feel free and proud," Guo said. However, Guo has his limits. If prices rise, Guo said he wouldn't contemplate buying another Harley. 

(REUTERS/Thomas Peter)

Fried vegetables are seen in the kitchen of the restaurant where chef Liu Ming works, in Beijing, China, April 11, 2018. Liu said the oil that his restaurant uses is produced with soybeans imported from the United States, and the business won't change the brand even if prices rise. "We use this oil because it gives the food a bright colour and does not leave a strange smell or taste," he said. "We don't know what will happen to our dishes if we change the oil."

(REUTERS/Thomas Peter)

Xie Guoqiang, who runs the Vin Place wine and liquors store, poses for a photograph inside the shop in Beijing, China, April 10, 2018. Xie said in an interview that the tariffs would have little impact on his business, as the shop mostly imports wine and liquors from France, Chile, Austria and Argentina.

(REUTERS/Damir Sagolj)

A bottle of Jack Daniel's Tennessee whiskey is seen on a shelf at the Vin Place wine and liquors store in Beijing, China April 10, 2018. Xie Guoqiang, who runs Vin Place, said in an interview that the tariffs would have little impact on his business, as the shop mostly imports wine and liquors from France, Chile, Austria and Argentina.

(REUTERS/Damir Sagolj)

Liu Ming, a chef at a Sichuan restaurant in Beijing, poses for a picture at the back door of the kitchen where he works in Beijing, China, April 11, 2018. Liu said the oil that his restaurant uses is produced with soybeans imported from the United States, and the business won't change the brand even if prices rise. "We use this oil because it gives the food a bright colour and does not leave a strange smell or taste," he said. "We don't know what will happen to our dishes if we change the oil." 

(REUTERS/Thomas Peter)

Liu Anqi uses flour made from imported grain at the baking studio she runs with friends, in Beijing, China, April 12, 2018. Liu has just opened a bakery in Beijing with her friend. She also teaches customers how to make cakes with a brand of flour that uses only wheat from the United States and Canada. "Flour is one of the most important ingredients in baking and its quality varies with different brands," Liu said, adding that finding a new brand would be time-consuming and higher taxes on this wheat would force her to raise cake prices and tuition fees, which could turn customers away. 

(REUTERS/Thomas Peter)

A bottle of oil is seen in the kitchen of the restaurant where chef Liu Ming works, in Beijing, China, April 11, 2018. Liu said the oil that his restaurant uses is produced with soybeans imported from the United States, and the business won't change the brand even if prices rise. "We use this oil because it gives the food a bright colour and does not leave a strange smell or taste," he said. "We don't know what will happen to our dishes if we change the oil." 

(REUTERS/Thomas Peter)

Zang Yi poses for a picture as her Tesla car is charging at a charging point in Beijing, China, April 13, 2018. Zang said if the trade tensions resulted in pricier U.S. imports, she wouldn't consider American brands when the time comes to buy a new car. "With the tariff, I would have to pay tax of 100,000 yuan to 200,000 yuan if I were to buy a new Tesla," she said. 

(REUTERS/Thomas Peter)

Zang Yi charges her Tesla car at a charging point in Beijing, China, April 13, 2018. Zang said if the trade tensions resulted in pricier U.S. imports, she wouldn't consider American brands when the time comes to buy a new car. "With the tariff, I would have to pay tax of 100,000 yuan to 200,000 yuan if I were to buy a new Tesla," she said. 

(REUTERS/Thomas Peter)

A Chinese woman tastes wine during a wine seminar in Beijing, China, April 14, 2018.

(REUTERS/Thomas Peter)

Shan Yuliang, salesperson at a cigarette and wine shop, poses with a carton of Marlboro cigarettes in Beijing, China, April 8, 2018. "The moment I saw the news about the trade war on the internet, I felt something big was coming. Previously I would not think about what brand to buy. Now I will give it a second thought and avoid buying American products to defend my country," Shan said. 

(REUTERS/Thomas Peter)

Wine tasting teacher Li Yangang poses for a picture during a wine seminar in Beijing, China, April 14, 2018. Li said in an interview that reduced sales of American wine in China would not hurt the local market because of its relatively small market share. "Australian wine and French wine would have a bigger impact," he said. 

(REUTERS/Thomas Peter)

Cartons of Marlboro cigarettes are seen stacked up on a shelf between Chinese cigarettes at a cigarette and wine shop in Beijing, China, April 8, 2018. 

(REUTERS/Thomas Peter)

Student He Bingzhang lights a Marlboro cigarette in Beijing, China, April 8, 2018. "I don't think the trade war would change my behaviour. I don't smoke a lot, probably one pack a month. Even if it costs 100 yuan, I would still buy Marlboro because it is affordable," He said. 

(REUTERS/Thomas Peter)

Student He Bingzhang poses for a picture as he smokes a Marlboro cigarette in Beijing, China, April 8, 2018. "I don't think the trade war would change my behaviour. I don't smoke a lot, probably one pack a month. Even if it costs 100 yuan, I would still buy Marlboro because it is affordable," He said. 

(REUTERS/Thomas Peter)

Guo Qingshan poses on his Harley-Davidson motorcycle in his village outside Beijing, China, April 7, 2018. "I love the sound of the engine and the muscle of the motor. When I ride it, I feel free and proud," Guo said. However, Guo has his limits. If prices rise, Guo said he wouldn't contemplate buying another Harley. 

(REUTERS/Thomas Peter)

Beef imported from the U.S. is seen at Wolfgang's, a high-end steak house in East Beijing's Sanlitun district, China, April 6, 2018. A 15-kg whole cut of beef from the United States is around 20 percent more expensive than its Australian counterpart, said Daniel Sui, deputy general manager at Wolfgang's. "Customers like U.S. beef because it tastes juicy and tender, but Wolfgang's only sells around seven to eight pieces of U.S. imported beef steak each day," Sui said. "The limited supply is because the Chinese government bans feed additives and only 5 percent of U.S. beef is qualified for export." 

(REUTERS/Thomas Peter)

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On Saturday, Beijing and Washington said they would keep talking about measures under which China would import more energy and agricultural commodities from the United States to narrow the $335 billion annual U.S. goods and services trade deficit with China.

During an initial round of talks this month in Beijing, Washington demanded that China reduce its trade surplus by $200 billion. No dollar figure was cited in the countries' joint statement on Saturday.

The Chinese Embassy in Washington did not return a request for comment on Mnuchin's statement.

Tension between the two sides has been growing since the Trump administration proposed tariffs of $50 billion on Chinese goods and said it might extend the levies to an additional $150 billion. China responded with its own measures targeting U.S. agriculture.

In response to Mnuchin's comments, Democratic Senator Chuck Schumer of New York, a frequent Trump critic, said he thought it would be a mistake for Trump to settle for "a promise to buy goods" with so many larger issues on the table.

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Treasury Secretary Steven Mnuchin
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Treasury Secretary Steven Mnuchin

Steven Mnuchin, President-elect Trump's nominee for Treasury secretary, testifies during his Senate Finance Committee confirmation hearing in Dirksen Building, January 19, 2017.

(Photo By Tom Williams/CQ Roll Call)

Treasury Secretary nominee Steven Mnuchin sits with Vanessa Trump (R), wife of Donald Trump Jr, before a swearing-in ceremony for senior staff at the White House in Washington, DC January 22, 2017.

(REUTERS/Carlos Barria)

Incoming Trump administration Treasury Secretary nominee Steven Mnuchin departs after working a simulated crisis scenario during transition meetings at the Eisenhower Executive Office Building at the White House in Washington, U.S. January 13, 2017.

(REUTERS/Jonathan Ernst)

Producer Steve Bing (L) and Honoree Steven Mnuchin recipient of the Philanthropic Leadership Award attend The Kaleidoscope Ball - Designing The Future benefitting the UCLA Children's Discovery and Innovation Institute at Mattel Children's Hospital UCLA at Beverly Hills Hotel on April 17, 2013 in Beverly Hills, California.

(Photo by Jason Merritt/Getty Images for BWR)

Steven Mnuchin, Treasury secretary nominee for U.S. President Donald Trump, right, attends a swearing in ceremony of White House senior staff in the East Room of the White House in Washington, D.C., U.S., on Sunday, Jan. 22, 2017. Trump today mocked protesters who gathered for large demonstrations across the U.S. and the world on Saturday to signal discontent with his leadership, but later offered a more conciliatory tone, saying he recognized such marches as a hallmark of our democracy.

(Andrew Harrer/Bloomberg via Getty Images)

 Steve Mnuchin and Lousie Linton arrive at the Premiere of Warner Bros. Pictures' 'Jupiter Ascending' at TCL Chinese Theatre on February 2, 2015 in Hollywood, California.

(Photo by Frazer Harrison/Getty Images)

Heather Mnuchin and Steve Mnuchin attend The Art Show Gala to Benefit The Henry Street Settlement at The Seventh Regiment Armory on February 23, 2005 in New York City.

(Photo by Joe Schildhorn/Patrick McMullan via Getty Images)

Treasury Secretary nominee Steven Mnuchin attends the inaugural parade of U.S. President Donald Trump in Washington, January 20, 2017. Donald Trump was sworn in earlier as the 45th President of the United States.

(REUTERS/Lucas Jackson)

Donald Trumps' Treasury Secretary Steven Mnuchin arrives on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States.

(Photo by Win McNamee/Getty Images)

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"If President Xi is going...to fail to take strong actions on intellectual property, cyber theft, and American companies having free access to sell goods in China...we will have lost," Schumer said.

Kudlow told CBS "Face the Nation" it was too soon to lock in the $200 billion figure for China's promised purchases. "The details will be down the road. These things are not so precise," he said.

In addition, he told ABC's "This Week" that the broader issues were still in play, and that China had "structural reforms" such as lowering tariffs and non-tariff barriers that will allow the United States to boost exports.

Trump was in a "very positive mood about this," Kudlow said.

However, he said there was no trade deal yet reached.

"There's no agreement for a deal," Kudlow told ABC. "We never anticipated one. There's a communique between the two great countries, that's all. And in that communique, you can see where we're going next."

One next step will be dispatching Commerce Secretary Wilbur Ross to China to look at areas where there will be significant increases, including energy, liquefied natural gas, agriculture and manufacturing, Mnuchin and Kudlow said.

Mnuchin said the United States expects to see a big increase of between 35 percent and 40 percent in agricultural exports to China this year alone and a doubling of energy purchases over the next three to five years.

"We have specific targets. I am not going to publicly disclose what they are. They go industry by industry," Mnuchin said.

Saturday's statement made no mention of whether there would be a relaxation of paralyzing restrictions on Chinese telecommunications equipment maker ZTE Corp imposed last month by the U.S. Commerce Department.

The action was related to violation of U.S. sanctions on Iran and North Korea and banned American companies from selling semiconductors and other components to ZTE, causing the Shenzhen-based company to cease most operations.

Trump said last week he had directed Ross to put ZTE back in business, but Kudlow said any changes would be minimal.

"If any of the remedies are altered they are still going to be very, very, tough, including big fines, compliance measures, new management, new boards," he said. "Do not expect ZTE to get off scot-free. Ain't going to happen."

(Reporting by Lindsay Dunsmuir, Howard Schneider, Doina Chiacu; Writing by Doina Chiacu; Editing by Lisa Shumaker)

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