By Josh Zumbrun, John D. McKinnon and William Mauldin
WASHINGTON -- President Trump signed an executive order that
would let the U.S. ban telecommunications gear from "foreign
adversaries," underscoring tensions with China even as the U.S.
said it would likely resume trade talks soon in Beijing after
reaching an impasse last week.
The developments came amid other actions from the Trump
administration on Wednesday possibly suggesting it was seeking to
push aside other trade issues and zero in on the disputes with
Beijing that have unsettled financial markets.
Along with the executive order, the Commerce Department said it
would add China's Huawei Technologies Co. to a list of entities
engaged in activities that are contrary to U.S. interests. That
could restrict sales or transfers of American technology to Huawei
by requiring a government license -- a potential body blow to the
company, which relies on some U.S. tech companies for chips. The
action would also hurt U.S. chipmakers who sell to Huawei.
U.S. national-security officials say Chinese companies including
Huawei and ZTE Corp. pose a threat, since under China's Communist
Party rule they are obliged to abide by Beijing's orders.
The Chinese Embassy, Huawei and ZTE didn't immediately respond
to requests for comment late Wednesday. Asked about the prospect of
such an order in Beijing earlier that day, Huawei Executive
Director David Wang said such a measure would be misguided.
The executive order came hours after Treasury Secretary Steven
Mnuchin said the two sides would "most likely" meet again in
Beijing in an effort to salvage the trade deal after each country
raised tariffs on goods from the other.
Mr. Mnuchin also signaled progress on removing steel and
aluminum tariffs against Mexico. Separately, the White House
postponed a final decision on whether to apply auto tariffs to
Europe and Japan for at least six months, according to people
familiar with the decision.
The U.S. and China remain at loggerheads on a trade deal, and
neither has yet moved to reverse plans to raise tariffs. Still, the
prospect of new talks on China and hopeful signs on auto, steel and
aluminum tariffs were enough to lift financial markets for a second
day in a row.
The Dow Jones Industrial Average closed up 116 points, or 0.5%.
Major indexes fell sharply last week and again Monday as talks
broke down and the U.S. and China responded with tit-for-tat
tariffs, fueling fears that the conflict could drag on for
months.
As President Trump has often viewed the stock market as a
barometer for his administration, the positive signs were likely
sent for strategic reasons, said Benn Steil, the director of
international economics at the Council on Foreign Relations.
"It would appear as if he's concerned with the market reaction
and is trying to soften it," Mr. Steil said.
Mr. Mnuchin, responding to questions at a Senate Appropriations
Committee hearing, said negotiators were "very close to a historic
agreement with China" a few weeks ago but more recently "things had
gone in a different direction."
The U.S. has said China backed away from commitments to change
its laws to carry out provisions of the trade deal in areas like
intellectual property and government subsidies.
The U.S. team is "most likely to go to Beijing at some point in
the near future to continue those discussions," Mr. Mnuchin said,
but didn't give more details. He and U.S. Trade Representative
Robert Lighthizer have represented the U.S. in talks with Chinese
officials.
Negotiators for both nations are discussing specific dates for
the trip, most likely during the last week of May, said people
familiar with the planning.
Mr. Mnuchin also said the administration is making progress
resolving steel and aluminum tariffs that were applied to Canada
and Mexico.
Those tariffs hadn't been resolved during negotiations over a
new trade agreement among the three countries known as the
U.S.-Mexico-Canada Agreement, or USMCA.
Key Republican lawmakers have signaled they won't vote for the
USMCA deal, which needs congressional approval to take effect,
unless the steel and aluminum tariffs against Canada and Mexico are
removed.
"I think we are close to an understanding with Mexico and
Canada" on resolving the steel and aluminum tariffs, Mr. Mnuchin
said, adding resolving the tariffs is "a very important part of
passing USMCA."
Canadian Foreign Minister Chrystia Freeland said she discussed
the steel and aluminum tariffs Wednesday with Mr. Lighthizer and
Sen. Chuck Grassley, the Republican Chairman of the Senate Finance
Committee.
"We had good conversations today," Ms. Freeland told reporters
on Capitol Hill. "The Canadian position remains as it has been from
the very outset, that we believe that these tariffs need to be
lifted."
Those developments came as the White House postponed for about
six months the final decision on whether to impose broad tariffs on
automobile and auto-part imports, two administration officials said
Wednesday.
Mr. Trump was facing a deadline this week on whether to apply
the tariffs following a report from the Commerce Department about
the national-security risks of automotive imports.
The U.S. and global auto industry are united in opposing the
tariffs, and most industry officials were expecting a delay rather
than an immediate decision to impose tariffs.
Mr. Trump has repeatedly warned he could impose tariffs on cars
produced by major trading partners including the European Union and
Japan, and the administration has sought to use the pressure from
that threat to negotiate bilateral trade agreements.
Talks with Japan and the EU are in the early stages, however,
and trade experts say the administration needs more time to seek
agreements before resorting to tariffs, which could chill efforts
to strike a deal.
Mr. Trump faces broad opposition from the industry and lawmakers
on the tariffs, as well as legal challenges to his use of the
national-security law known as Section 232 to apply them. The law
allows for an additional 180 days for negotiations with trading
partners.
Tariffs on the global automobile industry of 25%, as the
president has threatened, would be a seismic event. Every major
auto maker has complex international supply chains. Passenger cars
are the single largest U.S. import, worth $173 billion in 2018;
other vehicles and auto parts together represent another $199
billion a year of imports.
The prospect of a delay in the auto tariffs provided at least
some temporary relief to the auto makers and suppliers
Wednesday.
"We are grateful for the additional time and for additional
consideration," said Ann Wilson, senior vice president at the Motor
and Equipment Manufacturers Association. She added that suppliers
"fundamentally disagree" with the notion that imported components
are a national-security risk.
The Trump administration is likely to formalize the delay in the
coming days. It wasn't immediately known if the coming statement
would detail possible tariffs or quotas or name the trading
partners that could be hit by penalties.
On yet another front, the administration has been working to
ameliorate the impact on farmers of retaliatory tariffs from U.S.
trading partners.
Agriculture Secretary Sonny Perdue told reporters on Wednesday
that the USDA is looking to construct an aid package for farmers in
a range of $15 billion to $20 billion, an amount he said
corresponds to the department's estimates of how much farmers have
lost due to the trade conflict.
He said the program would likely include direct payments to
farmers, just like a previous program last year, and may be able to
be carried out without fresh congressional approval.
President Trump has suggested a new farm aid program could also
include a humanitarian dimension. "Certainly the president's
concept of buying commodities for humanitarian purposes may also be
a part of that," Mr. Perdue said, but didn't provide any details on
how such a program would work.
--Vivian Salama in Washington, Dan Strumpf in Hong Kong and
Adrienne Roberts in Detroit contributed to this article.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com, John D. McKinnon
at john.mckinnon@wsj.com and William Mauldin at
william.mauldin@wsj.com
(END) Dow Jones Newswires
May 15, 2019 19:25 ET (23:25 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.