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US Treasury Secretary: Phase 2 China deal may not be 'big bang'

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
US President Donald Trump stands with Chinese Vice Premier Liu He, before signing the Phase 1 of a trade deal between the US and China on January 15, 2020. Photo: Mark Wilson/Getty Images

US Treasury Secretary Steve Mnuchin said Wednesday that US tariffs on China would remain in place until a ‘Phase Two’ trade agreement was signed and said any deal could be staggered.

“The President has said If we get all of Phase Two done, he will remove the tariffs,” Mnuchin said during a panel at Davos. “We could easily have Phase Two a), Two b), Two c), it doesn’t need to be a big bang, and we’ll take tariffs off along the way.”

The US and China last week signed a ‘Phase One’ trade deal after almost two years of negotiations between the two sides.

“The China deal, we couldn’t be more pleased,” Mnuchin said Wednesday. “It is a very significant agreement.”

The agreement has eased the trade war between the two countries but over $300bn of US tariffs on Chinese imports remain in place. Mnuchin said tariffs had been a “big incentive” for China to come to the negotiate table.

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The Treasury Secretary said there was “no deadline” for concluding ‘Phase Two’ talks.

“We’re very focused on implementing Phase One,” Mnuchin said. “We’ll start on Phase Two. If we get that done before the election, great, if it takes longer, that’s fine.”

Sitting alongside Mnuchin, IMF managing director Kristalina Georgieva said the world economy was “in a better place” partly due to the deal between the US and China. She said there was now “a truce and a pathway to peace.”

‘Free, fair and balanced trade’

Mnuchin said: “Words like trade peace, trade war, those are not the right words. To me it’s about free, fair and balanced trade.”

The Treasury Secretary also talked up a possible trade deal with the UK once it leaves the EU, saying this was a “big priority”.

“We’re looking forward to tremendous growth with the UK and US,” Mnuchin said.

However, he threatened tit-for-tat tariffs on the UK if it pressed ahead with plans for a tax on ‘Big Tech’ companies.

UK Chancellor Sajid Javid, who sat on the panel with Mnuchin, defended plans to introduce the new tax in April and talked up the prospect of a post-Brexit trade deal with the US.

“We’ve already started work and we’re working closely together,” Javid said. “That is a huge priority for us.”

WATCH HERE: Yahoo Finance at the World Economic Forum in Davos