Trump softens commercial stance towards China and raises optimism

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More conciliatory position of the administration raised at least the possibility that both parties could work towards a negotiated end to the punitive tariffs that they are expected to impose on the goods of others as of July 6. And this fueled a temporary recovery in the financial markets, which feared an escalation of the trade war.

Stocks sunk late in the day, after Larry Kudlow, Trump's top economic advisor, said on "Varney & Co." from Fox Business Network. that the change of policy of the administration should not necessarily be considered as a softening of its position towards China.

Alex Edelman / CNP / Newscom

It's unclear whether the policy change will lead to a truce between the two largest economies of the world, which is facing high risk, or if formal negotiations could begin soon. But Kudlow told reporters that both parties are "in communication". And badysts said that they rejoiced that the administration offered a semblance of olive branch in Beijing.

"It seems that this initiative is being undertaken with the aim of reaching a final resolution on US trade policy issues – China," said Stephen Ezell, who manages the global innovation policy to the think tank of the Foundation for Information Technologies and Innovation.

Last month, the White House announced that by the end of the week, the idea was to prevent Chinese companies belonging to the state or politically connected to 39, buy advanced technology in the United States. Beijing is looking for such technology as part of its "Made in China 2015" initiative, a roadmap to becoming a global technology leader.

Doug Mills / The New York Times / Redux

But on Wednesday, the Trump Administration announced a less draconian approach: it would work with Congress to strengthen foreign investment reviews under the US Foreign Investment Committee, or CFIUS, led by Treasury Secretary Steven Mnuchin. CFIUS applies to all countries – not just China – and exams are conducted on a case-by-case basis.

"That makes sense," said Christopher Brewster, a senior member of the CFIUS practice at the law firm. Stroock & Stroock & Lavan.

"Defining a technology that is" out of bounds "is an extremely difficult task," said Brewster. "For this reason, large-scale investment restrictions are a clumsy tool that inherently risks being too inclusive or not inclusive. Using the CFNU process is a more nuanced approach."

strengthen the CFIUS Act, and the bill will likely be considered by a House-Senate conference committee for a defense measure approved by the Senate.

Asked about the change of administration, Mnuchin told reporters: "We are not focusing on China or we do not focus on China" but a question of the use any means to resolve trade disputes with Beijing. "For those who mean that China is weak, the answer is no." The question was, what were the appropriate tools? "

Trump campaigned for the White House on a commitment to take a much more aggressive stance with China and other trading partners.He has long accused other countries of exploiting poorly negotiated trade agreements and using practices Unfair to sell America much more than they buy.The United States recorded a trade deficit of 552 billion dollars with the rest of the world (336 billion dollars with China alone) ]

W Ashington and Beijing are trying to supplant US technological dominance through cyber-theft and US policies. On July 6, the United States will charge $ 34 billion worth of Chinese imports – an amount that could reach $ 450 billion if Beijing refuses to yield and retaliate with its own sanctions. In response, China is ready the same day to impose tariffs on billions of dollars worth of US exports, including soybeans – a direct threat to Trump supporters in central America. Many members of Congress have warned the administration to avoid a trade war with China.

"The President is dissatisfied with his response to the trade talks, and he has proposed the possibility of an additional tariff measure," Kudlow said. referring to China. "The ball is in their court, I'm still optimistic, but I have to be realistic."

James Lewis, who studies technology policy at the Center for Strategic and International Studies, said he did not anticipate any quick resolution to the dispute.

"Both sides dance around, they know that a trade war is too expensive," Lewis said. But the Chinese do not want to respect the rules, we have to start pushing the game. "

The debate within the administration on how to handle According to Peter Navarro, a prominent business advisor, and the led by Mnuchin who favored a less confrontational stance, China would have stepped up – Peter Navarro lost, and Steve Mnuchin won, and we ended up with what is really Rod Hunter, a lawyer who served as an economic representative at National Security Council in the administration of President George W. Bush.

But Hunter noted that Trump's approach to policymaking is so mercurial that it's impossible to say whether the conciliatory approach will last or whether Navarro's camp will make a comeback.

It's hard, Hunter said, "to know who's got their hands on the wheel."

Mnuchin told reporters that the differences between Trum's counselors had been exaggerated. He said there was unanimous support for the new approach when it was presented to the President for final approval earlier this week.

"In the end, all the presidential advisers were 100% unanimous when we sat down with the president," Mnuchin said.

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The author of AP Catherine Lucey contributed to this report.