Chinese Vice-Foreign Minister Zheng Zeguang yesterday acknowledged there was a trade imbalance, but said it was mostly due to difference in the two countries' economic structures and noted that China had a trade deficit in services. The U.S. has its highest trade deficit with China at $347 billion past year.
The US has a massive trade deficit of USD 347 billion with China, followed by Japan (USD 68.9), Germany (USD 64.9), Mexico (USD 63.2 billion), Ireland (USD 35.9 billion) and Vietnam (USD 32 billion).
President Donald Trump ordered staff yesterday to pinpoint countries and goods responsible for America's almost US$50 billion trade deficit, in a protectionist warning shot to trade partners like China. Let's not make this a China story.
"This is the first time in modern history a president has ordered a review of reasons for the trade deficit", he said, arguing that the study would allow the administration to deal with America's "large and persistent trade deficit", the largest of any developed country.
During the campaign Trump promised to get tough on trade with China, and to call out China for currency manipulation.
"It will demonstrate the administration's intention not to hip shoot, not to do anything casual, not to do anything abruptly, but to take a very measured and analytical approach", said Ross, adding that the administration might take actions before the report has been fully compiled.
While Trump has long argued that trade deficits imperil US workers, Ross cautioned that they aren't necessarily all bad.
"What's driving it is that the USA has the lowest tariff rates and the lowest non-tariff barriers of any developed country. This is a story about trade abuses, this is a story about an under-collection of duties", Mr Navarro said. The other will look into whether foreign companies are "dumping" their products in the U.S., that is, selling them at abnormally low prices in order to gain market share or damage competitors' profitability. The order will establish more effective bonding requirements, among other measures. "American companies must be prepared to look at other alternatives", Trump tweeted.
Mr Trump signed the orders following a meeting in the White House on Friday with representatives of leading United States manufacturing companies.
But Navarro declined to comment, insisting, "We're not here for tweets".
The US trade deficit in goods and services past year with Mexico was $62 billion, but with Canada the US had a surplus of $8 billion. The trade gap rose to its highest level since 2012 previous year, though the imbalance remains below its 2006 high, shortly before the Great Recession struck.
Trump has portrayed trade deficits as strangling economic growth and devastating factory jobs at home. The other orders stricter enforcement of anti-dumping rules against foreign firms that sell in the United States at unfairly lower prices. The Chinese president is scheduled to visit the USA next week and Trump said he anticipates it will be a "difficult" conversation.