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Trump softens his stand on China; not to take extreme path on trade war

By Shubham

After waging a hard battle against Chinese imports into the US by levying high tariffs, US President Donald Trump has suddenly decided against adopting a strong stance on restricting Chinese investments in the US and rather work on a more modest measure in cooperation with the Congress.

Trump's softening of stand is expected to temporarily defuse tensions between the two economies that escalated a tit-for-tat trade war after the US president started targeting China's trade policies. As he piled on steep tariffs on Chinese goods, Beijing also retaliated with similar measures, sending the global markets into a tizzy.

Trump softens his stand on China; not to take extreme path on trade war

Earlier, there were reports that Trump was considering to use emergency presidential powers to restrict Chinese investment in American businesses. The Treasury Department was reportedly working on rules that would bar companies with at least 25 per cent Chinese ownership from investing in US firms with "industrially significant technology". The purpose was to limit China's manufacturing capability in robotics, aerospace and aviation equipment, etc. by preventing it from acquiring the suitable technology.

But Trump seems to have changed his mind and is seeking new legislation to strengthen the current review process for foreign investment in American firms.

According to one Vox report, the reason behind Trump's change of decision is US Treasury Secretary Steve Mnuchin who has been working overtime for some time now to convince the president to take a more cautious approach vis-à-vis China to make it change some of its controversial practices in trade and investment.

Trump said on Wednesday, June 27, that the bill in Congress "will enhance our ability to protect the United States from new and evolving threats posed by foreign investment" even while maintaining an "open investment environment", the Vox reported.

The Senate and House have passed distinct versions of the bill called the Foreign Investment Risk Review Modernization Act but they need to be reconciled before Trump gives his assent.

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