President Donald Trump on Tuesday endorsed U.S. Treasury Secretary Steven Mnuchin’s measured approach to restricting Chinese investments in U.S. technology companies, saying a strengthened merger security review committee could protect sensitive American technologies.
Trump, in remarks to reporters at the White House, said the approach would target all countries, not just China, echoing comments from Mnuchin on Monday amid a fierce internal debate over the scope of investment restrictions due to be unveiled Friday.
“It’s not just Chinese” investment, Trump told reporters when asked about the administration’s plans.
Mnuchin and White House trade adviser Peter Navarro sent mixed signals on Monday about the Chinese investment restrictions, ordered by Trump on May 29. Mnuchin said they would apply to “all countries that are trying to steal our technology,” while Navarro said they would be focused specifically on China.
The restrictions are being developed to help put pressure on China to address the administration’s complaints that it has misappropriated U.S. intellectual property through joint-venture requirements, unfair licensing policies and state-backed acquisitions of U.S. technology firms.
Mnuchin would prefer to use new tools associated with pending legislation to enhance security reviews of transactions by the Committee on Foreign Investments in the United States (CFIUS), some administration officials have said.
A government official told Reuters on Sunday that Treasury had been working on a proposal to ban acquisitions of U.S. firms with “industrially significant technology” by companies with at least 25 percent Chinese ownership.
Asked about the pending restrictions at a White House meeting with Republican lawmakers on Tuesday, Trump said: “We have the greatest technology in the world. People copy it. And they steal it, but we have the great scientists, we have the great brains and we have to protect that and we’re going to protect it and that’s what we’re doing.
“And that can be done through CFIUS. We have a lot of things we can do it through and we’re working that out,” he said.
Prior to the meeting, Mnuchin was seen by reporters in the West Wing of the White House. A Treasury spokesman did not respond to a Reuters request for comment.
The U.S. House of Representatives passed legislation on Tuesday to strengthen the authority of CFIUS by a 400-2 vote, with many similarities to a Senate-passed bill. Both versions would expand CFIUS reviews to minority stakes in U.S. companies and investments that may reveal information on critical infrastructure to foreign governments.
Signs of Fed shift
Trump’s intensifying list of trade disputes with China, the European Union, Canada and Mexico showed signs of influencing Federal Reserve policy on Tuesday. Atlanta Fed President Raphael Bostic said in Birmingham, Alabama, that increased tensions could cause him to oppose a fourth rate increase this year.
Trump said earlier on Twitter that his administration was “finishing up” its study of tariffs on U.S. car imports, suggesting that he would take action soon.
The Alliance of Automobile Manufacturers, a trade group, said it would file written comments in the study warning that a 25 percent tariff on imported passenger vehicles would cost American consumers $45 billion annually, or $5,800 per vehicle.
Tariffs of 25 percent on an initial $34 billion worth of Chinese imports are due to take effect on July 6, with a further $16 billion undergoing a vetting process for activation later this summer.
Should China follow through on its vow to retaliate in equal measure with tariffs on U.S. soybeans, cars and other goods, Trump has threatened to impose 10 percent tariffs on a further $400 billion worth of Chinese goods.
A Reuters analysis of the tariff lists found that most of the Chinese products targeted thus far are classified as intermediate or capital goods — avoiding a direct tax on voters — but many consumer goods have been caught up in the net, and will be targeted in future rounds.
Trump on Tuesday also threatened Harley-Davidson with higher taxes if it proceeded with a plan to move some production out of the United States to avoid the EU’s retaliatory tariffs on American motorcycles.