- Donald Trump’s top economic advisers are fighting over the direction of US trade policy.
- The president’s protectionist adviser Peter Navarro has consistently butted heads with Treasury Secretary Steven Mnuchin.
- The divide between the free-trade wing of Trump’s administration and the protectionist wing is causing friction at a critical time for US trade policy, especially with respect to China.
The highest-ranking economic advisers to President Donald Trump are meeting with China’s top economic official on Thursday in a high-stakes trade negotiation. And the meeting comes amid exploding tension within the US side.
Recent battles have bubbled up and spewed out into the open, as advisers fight to advance two starkly different views of the world economy amid the critical China talks.
On Wednesday, Bloomberg first reported that Peter Navarro, Trump’s more protectionist, anti-China adviser, would not be part of the talks with China because of increasingly erratic recent behaviour.
According to multiple reports, Navarro, the head of the National Trade Council, blew up at Treasury Secretary Steven Mnuchin during a recent trip to Beijing. Navarro was said to be unhappy with Mnuchin’s direction in the talks. The pair exchanged heated comments and loudly cursed at each other, according to multiple reports.
But a White House official told Business Insider that Navarro would in fact be attending the meeting with Chinese Vice Premier Liu He.
Then on Thursday, CNBC reported that Navarro may not be part of the talks after all – but did take part in a welcome dinner the night before. On top of that, one official told CNBC the reports were part of a smear campaign against Navarro.
It’s not a secret that Trump’s economic team is roughly divided into two camps:
- On the one hand is the free-trade group, with Mnuchin and Larry Kudlow, the National Economic Council director.
- On the other is the more nationalist-leaning team, including US Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross, and Navarro.
Trump’s typical hardline rhetoric on trade softened in recent weeks, especially when it comes to China. The president expressed openness to a deal in tweets on Sunday and Monday, including giving the Chinese telecom giant ZTE a potential reprieve from sanctions imposed by the Commerce Department.
This willingness to make a deal appears to indicate that the free traders, led by Mnuchin, hold the upper hand – at least at the moment.
The continued battles between top-level members of the Trump team also come at a critical juncture for US international trade policy. Trump’s chaotic back-and-forth on trade already makes it difficult for trade partners to determine the outlook of US policy. Battles among different factions of the Trump team could further complicate the situation.
In addition to the talks with China over the recent back-and-forth tariffs, steel and aluminium tariff exemptions for key US allies – including the European Union and Canada – are set to expire on June 1. And the North American Free Trade Agreement renegotiation is still ongoing.
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