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Lieutenant General
Interesting twist on trade war heavy infighting within Trump admin
Ross losing sway with Trump on China
By and
05/14/2018 06:36 PM EDT
President Donald Trump once called Commerce Secretary Wilbur Ross a "killer," but he has steadily become a bit player. | John Shinkle/POLITICO
By
Wilbur Ross has been largely sidelined in high-stakes trade negotiations with China in the latest signal that President Donald Trump is losing confidence in his Commerce secretary, according to three people with knowledge of the matter.
Ross — whom Trump once affectionately called a “killer,” a high compliment in the president’s lexicon — has steadily become a bit player, with the president regularly leaning on Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and White House trade adviser Peter Navarro.
The Commerce secretary’s standing took another hit this week when the president tweeted criticism of the department’s recent decision to block the Chinese phone-maker ZTE from accessing U.S. technology, according to a current administration official and a former official familiar with the internal discussions.
“He’s not a primetime player here,” said one trade strategist closely tracking the administration’s trade discussions.
With Ross marginalized, Mnuchin’s influence with the president is on the rise, according to current and former administration officials. The president has warmed to the idea of reaching an agreement with China meant to avert a lengthy trade war ahead of the midterm elections, a position backed by Mnuchin and other moderates in the administration.
Trump’s new openness to a deal is a sharp departure from his fiery rhetoric against China’s trade practices, and it would mark a major defeat for Navarro and Lighthizer, the administration’s strongest critics of Beijing.
The situation for Ross got worse on Monday when, one month after imposing what many analysts viewed as a “death sentence” on ZTE, he was forced to say the administration was reconsidering his decision to ban U.S. companies from doing business with the Chinese state-owned enterprise for seven years.
A former Obama administration official said the ZTE problem appeared to be of Ross’ own making. The Commerce secretary meted out an extremely harsh sentence on the company after it was caught violating the terms of a March 2017 penalty agreement that included a $1.19 billion fine and required it reprimand employees involved in the sales to Iran and North Korea.
Instead, many were awarded bonuses, incurring Ross’ wrath. The Commerce secretary's crackdown last week forced the company to file notice that it was ceasing major business operations.
“This does not seem to have been handled thoughtfully or strategically,” the former Obama administration official said. “This was something that they clearly didn't understand what a big deal it would be. And then for the president to cross the line into an enforcement matter is just unprecedented and a terrible precedent as well.”
“There's no doubt these guys [ZTE] are bad actors and deserve punishment. They admitted to lying to the Commerce Department,” the former Obama official said. “But the secretary has a huge amount of discretion at that point about what to do and from my perspective is you've got to be proportionate to what they've done.”
Trump’s Sunday tweet was at least in part a response to warnings from Chinese officials that crucial trade discussions could be undercut if the United States did not rethink Commerce’s ZTE decision, according to a former Trump administration official and another person close to the White House.
Many of the president’s aides, worried about the negative impacts of a trade war ahead of the midterm elections, are eager to reach a deal with China on trade that the president can cast as a victory.
“In order to avoid catastrophe, you need some trade wins and you need them soon,” the former Trump administration official said.
Mnuchin and other senior administration officials have been in direct discussions with the Chinese and one option under discussion is ratcheting back the penalties on ZTE in exchange for lifting Chinese tariffs on agricultural products, according to one person briefed on the issue. Trump is also laser-focused on reducing the United States’ trade deficit with China, another issue that could play prominently in the deal.
By and
Some hardliners in the administration are strongly opposed to such a deal, arguing that China can’t be trusted to follow through and worrying privately that the president is being swindled by more moderate aides who opposed his aggressive approach to Beijing. Some have also begun to gripe about Mnuchin’s central role in the talks, asserting that he is bigfooting other advisers and is too eager to clinch a deal with China.
Another administration official pushed back at the idea that Mnuchin was bigfooting other administration players, saying it was clear to everyone involved in the talks that Trump himself would decide the major components of any agreement with China.
Mnuchin is the highest-ranking Cabinet member involved in the talks with China, so protocol dictates that he leads the U.S. delegation.
Meanwhile, Ross’ relationship with Trump has been deteriorating for more than a year. During the transition and early part of Trump’s presidency, he was a central player in trade and manufacturing policy. But current and former administration officials said Ross infuriated the president by pushing a 2017 deal that reopened the Chinese market to U.S. beef — but only to a tiny portion of U.S. production from cattle raised without artificial growth hormones.
Ross also backed a Chinese offer in 2017 to cut its steel production capacity by 150 million metric tons by 2022.
Trump chafed when the beef deal came under heavy outside criticism and he rejected Ross’ proposal on Chinese steel capacity, calling instead for strict tariffs, according to the former Trump administration official.
“Wilbur in many ways has been his own worst enemy,” the former official said.
Ross was also a last-minute addition when Mnuchin led a delegation of U.S. officials to China in early May for high-level trade talks. Originally, he had expected to remain in the U.S. working on a potential steel tariff agreement with the European Union.
White House spokesman Raj Shah said in an email Monday that Trump has “full confidence in Secretary Ross and his efforts to bring the Chinese to the table and negotiate on behalf of American workers.”
"This anonymous report about Secretary Ross is incorrect," he said. "Talks remain ongoing."
White House spokesman Raj Shah said in an email Monday that Trump has “full confidence in Secretary Ross and his efforts to bring the Chinese to the table and negotiate on behalf of American workers.”
The Commerce Department did not respond immediately to a request for comment.
The turmoil comes as Chinese Vice Premier Liu He is due in Washington this week for high-level trade talks that grew out of the Trump administration’s threat to impose tariffs on up to $150 billion worth of goods because of concerns over China’s alleged theft of intellectual property.
Ross tried to downplay any connection between the talks and ZTE. “Our position has been that's an enforcement action separate from trade,” he said.
Trump appeared to contradict Ross in a tweet Monday afternoon: “ZTE, the large Chinese phone company, buys a big percentage of individual parts from U.S. companies,” he wrote. “This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi.”
Still, the White House, concerned about the perception that Trump was trading away a criminal penalty on a Chinese firm for some gain on the trade front or Beijing’s cooperation in nuclear disarmament talks with North Korea, said the ZTE issue was just one of many in the “complex” U.S.-China relationship.
“The president has asked Secretary Ross to look into it, consistent with applicable laws and regulations,” Shah told reporters at a briefing Monday. China has raised the issue with the United States “at a number of levels, as part of bilateral talks on a number issues,” and not just in the trade talks, he said.
However harsh Ross’ decision last month to impose a seven-year year ban on ZTE may have been, Trump’s intervention in what is essentially a law enforcement matter may be even worse, some analysts said.
“Saying we're not going to enforce American law is a terrible precedent, especially with regard to the Chinese, but really in general,” said Derek Scissors, a China specialist at the American Enterprise Institute. “It's insane that we would let the Chinese off the hook.”
Ross losing sway with Trump on China
By and
05/14/2018 06:36 PM EDT
President Donald Trump once called Commerce Secretary Wilbur Ross a "killer," but he has steadily become a bit player. | John Shinkle/POLITICO
By
Wilbur Ross has been largely sidelined in high-stakes trade negotiations with China in the latest signal that President Donald Trump is losing confidence in his Commerce secretary, according to three people with knowledge of the matter.
Ross — whom Trump once affectionately called a “killer,” a high compliment in the president’s lexicon — has steadily become a bit player, with the president regularly leaning on Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and White House trade adviser Peter Navarro.
The Commerce secretary’s standing took another hit this week when the president tweeted criticism of the department’s recent decision to block the Chinese phone-maker ZTE from accessing U.S. technology, according to a current administration official and a former official familiar with the internal discussions.
“He’s not a primetime player here,” said one trade strategist closely tracking the administration’s trade discussions.
With Ross marginalized, Mnuchin’s influence with the president is on the rise, according to current and former administration officials. The president has warmed to the idea of reaching an agreement with China meant to avert a lengthy trade war ahead of the midterm elections, a position backed by Mnuchin and other moderates in the administration.
Trump’s new openness to a deal is a sharp departure from his fiery rhetoric against China’s trade practices, and it would mark a major defeat for Navarro and Lighthizer, the administration’s strongest critics of Beijing.
The situation for Ross got worse on Monday when, one month after imposing what many analysts viewed as a “death sentence” on ZTE, he was forced to say the administration was reconsidering his decision to ban U.S. companies from doing business with the Chinese state-owned enterprise for seven years.
A former Obama administration official said the ZTE problem appeared to be of Ross’ own making. The Commerce secretary meted out an extremely harsh sentence on the company after it was caught violating the terms of a March 2017 penalty agreement that included a $1.19 billion fine and required it reprimand employees involved in the sales to Iran and North Korea.
Instead, many were awarded bonuses, incurring Ross’ wrath. The Commerce secretary's crackdown last week forced the company to file notice that it was ceasing major business operations.
“This does not seem to have been handled thoughtfully or strategically,” the former Obama administration official said. “This was something that they clearly didn't understand what a big deal it would be. And then for the president to cross the line into an enforcement matter is just unprecedented and a terrible precedent as well.”
“There's no doubt these guys [ZTE] are bad actors and deserve punishment. They admitted to lying to the Commerce Department,” the former Obama official said. “But the secretary has a huge amount of discretion at that point about what to do and from my perspective is you've got to be proportionate to what they've done.”
Trump’s Sunday tweet was at least in part a response to warnings from Chinese officials that crucial trade discussions could be undercut if the United States did not rethink Commerce’s ZTE decision, according to a former Trump administration official and another person close to the White House.
Many of the president’s aides, worried about the negative impacts of a trade war ahead of the midterm elections, are eager to reach a deal with China on trade that the president can cast as a victory.
“In order to avoid catastrophe, you need some trade wins and you need them soon,” the former Trump administration official said.
Mnuchin and other senior administration officials have been in direct discussions with the Chinese and one option under discussion is ratcheting back the penalties on ZTE in exchange for lifting Chinese tariffs on agricultural products, according to one person briefed on the issue. Trump is also laser-focused on reducing the United States’ trade deficit with China, another issue that could play prominently in the deal.
By and
Some hardliners in the administration are strongly opposed to such a deal, arguing that China can’t be trusted to follow through and worrying privately that the president is being swindled by more moderate aides who opposed his aggressive approach to Beijing. Some have also begun to gripe about Mnuchin’s central role in the talks, asserting that he is bigfooting other advisers and is too eager to clinch a deal with China.
Another administration official pushed back at the idea that Mnuchin was bigfooting other administration players, saying it was clear to everyone involved in the talks that Trump himself would decide the major components of any agreement with China.
Mnuchin is the highest-ranking Cabinet member involved in the talks with China, so protocol dictates that he leads the U.S. delegation.
Meanwhile, Ross’ relationship with Trump has been deteriorating for more than a year. During the transition and early part of Trump’s presidency, he was a central player in trade and manufacturing policy. But current and former administration officials said Ross infuriated the president by pushing a 2017 deal that reopened the Chinese market to U.S. beef — but only to a tiny portion of U.S. production from cattle raised without artificial growth hormones.
Ross also backed a Chinese offer in 2017 to cut its steel production capacity by 150 million metric tons by 2022.
Trump chafed when the beef deal came under heavy outside criticism and he rejected Ross’ proposal on Chinese steel capacity, calling instead for strict tariffs, according to the former Trump administration official.
“Wilbur in many ways has been his own worst enemy,” the former official said.
Ross was also a last-minute addition when Mnuchin led a delegation of U.S. officials to China in early May for high-level trade talks. Originally, he had expected to remain in the U.S. working on a potential steel tariff agreement with the European Union.
White House spokesman Raj Shah said in an email Monday that Trump has “full confidence in Secretary Ross and his efforts to bring the Chinese to the table and negotiate on behalf of American workers.”
"This anonymous report about Secretary Ross is incorrect," he said. "Talks remain ongoing."
White House spokesman Raj Shah said in an email Monday that Trump has “full confidence in Secretary Ross and his efforts to bring the Chinese to the table and negotiate on behalf of American workers.”
The Commerce Department did not respond immediately to a request for comment.
The turmoil comes as Chinese Vice Premier Liu He is due in Washington this week for high-level trade talks that grew out of the Trump administration’s threat to impose tariffs on up to $150 billion worth of goods because of concerns over China’s alleged theft of intellectual property.
Ross tried to downplay any connection between the talks and ZTE. “Our position has been that's an enforcement action separate from trade,” he said.
Trump appeared to contradict Ross in a tweet Monday afternoon: “ZTE, the large Chinese phone company, buys a big percentage of individual parts from U.S. companies,” he wrote. “This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi.”
Still, the White House, concerned about the perception that Trump was trading away a criminal penalty on a Chinese firm for some gain on the trade front or Beijing’s cooperation in nuclear disarmament talks with North Korea, said the ZTE issue was just one of many in the “complex” U.S.-China relationship.
“The president has asked Secretary Ross to look into it, consistent with applicable laws and regulations,” Shah told reporters at a briefing Monday. China has raised the issue with the United States “at a number of levels, as part of bilateral talks on a number issues,” and not just in the trade talks, he said.
However harsh Ross’ decision last month to impose a seven-year year ban on ZTE may have been, Trump’s intervention in what is essentially a law enforcement matter may be even worse, some analysts said.
“Saying we're not going to enforce American law is a terrible precedent, especially with regard to the Chinese, but really in general,” said Derek Scissors, a China specialist at the American Enterprise Institute. “It's insane that we would let the Chinese off the hook.”
