Trump administration, world financial
officials clash over trade
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[April 21, 2017]
By Jason Lange and David Lawder
WASHINGTON (Reuters) - The Trump
administration had a simple but stark message for world financial
leaders who gathered in Washington on Thursday amid worries about rising
U.S. protectionism: fair trade means tit-for-tat tariffs.
Speaking to bankers just hours after the formal start of the
International Monetary Fund and World Bank spring meetings, White House
National Economic Council Director Gary Cohn said Washington was
prepared to get tougher in the trade arena.
"If you want to insist on having a tariff on a product - which we prefer
you not - the president believes that we should treat you in a
reciprocal fashion and that we should tax your product coming into the
United States," Cohn said. "That is free, that is open, and that is
fair."
Asked at the Institute of International Finance about his message for
his international counterparts, Cohn said the United States doesn't want
to be "taken advantage of" any more.
"The message is simple. We care about the United States of America, we
care about economic prosperity, we care about economic growth, we care
about trade, we care about being treated fairly," he said.
Earlier at the White House, President Donald Trump signed a directive to
study whether steel imports into the United States should be restricted
for national security reasons under a law passed in 1962.
Such moves, including a review of "Buy American" rules launched earlier
this week, have raised concerns that the Trump administration is looking
outside the World Trade Organization for remedies to restrict U.S.
imports.
IMF Managing Director Christine Lagarde told reporters on Thursday that
more needed to be done to make the global trading system fairer and
expressed a willingness to work with Trump to do just that.
In a news conference, Lagarde said there was a need to improve the WTO
dispute settlement rules as well as reduce government subsidies for
industry and tackle other trade distortions.
She said the IMF would do its part in working to cut government
subsidies for industry and other trade practices that limit competition,
but said "protectionist measures" needed to be avoided.
"From the various contacts that I've had with the (Trump) administration
so far, I have every reason to believe that we will make progress, that
we will cooperate all together in order to support and indeed improve
the system as we have it," Lagarde said.
The IMF also has expressed concerns about the Trump administration's
plan to cut taxes, releasing reports on Wednesday that said such a move
could fuel financial risk-taking and increase public debt.
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IMF Managing Director Christine Lagarde makes remarks during a press
briefing to open the IMF and World Bank's 2017 Annual Spring
Meetings, in Washington, U.S., April 20, 2017. REUTERS/Mike Theiler
Appearing alongside Cohn, U.S. Treasury Secretary Steven Mnuchin
said he would unveil the tax plan "soon, very soon," and predicted
it would be passed by Congress this year.
But he gave few details and shed no light on whether the plan would
include a controversial border-tax component.
"It will be sweeping, it will be significant and it will create a
lot of economic growth," Mnuchin said. "The plan will pay for itself
with growth."
Separately, World Bank President Jim Yong Kim also put in a plug for
free trade and said he was "encouraged" by his engagement so far
with Trump. But he added that he would not reduce the multilateral
lender's commitment to trade or to financing alternative energy
projects.
"The science of climate change didn't change with any particular
election, and I don't see that it will," Kim said at a news
conference. "We have to be an evidence-based organization."
'LITTLE LEVERAGE'
The IMF and World Bank meetings come about a month after Mnuchin
insisted that an anti-protectionism pledge be dropped from a Group
of 20 communique issued in Baden-Baden, Germany.
Eswar Prasad, former head of the IMF's China department, said the
Trump administration may choose to simply ignore the advice of the
IMF and other institutions.
"The IMF has little leverage since its limited toolkit of
analysis-based advice, persuasion, and peer pressure is unlikely to
have much of an impact on this administration's policies," said
Prasad, now an international trade professor at Cornell University.
Mnuchin's decision against naming China a currency manipulator last
week removed one concern for the IMF ahead of the meetings.
(Reporting by David Lawder; Additional reporting by Lindsay
Dunsmuir; Editing by Simon Cameron-Moore and Paul Simao)
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