Treasury Secretary Steven MnuchinSteven MnuchinThe Hill's Morning Report - Presented by Alibaba - Biden jumps into frenzied Dem spending talks Former Treasury secretaries tried to resolve debt limit impasse in talks with McConnell, Yellen: report Menendez, Rubio ask Yellen to probe meatpacker JBS MORE said Friday that the United States is willing to ramp up discussions with China to work out their economic differences, but the potential remains for a trade war.
Trump administration officials have spent the better part of this week trying to talk down the prospects of a prolonged trade fight that has raised concerns among congressional lawmakers and U.S. businesses who are worried that a protracted trade fight could stymie the nation's steady economic growth.
“We’ll continue to have discussions. But there is the potential of a trade war," Mnuchin said during an interview on CNBC.
But Mnuchin said he wanted to make clear that "it is not a trade war" at this point.
Decisions on the wide array of tariffs could take months and U.S. officials want to use the intervening time to talk to China about the economic changes they want to see on the trade front that would persuade President TrumpDonald TrumpTrump criticizes Justice for restoring McCabe's benefits Biden: Those who defy Jan. 6 subpoenas should be prosecuted Hillicon Valley — Presented by LookingGlass — Hackers are making big money MORE to halt the actions.
“We absolutely are willing to negotiate and not get into trade wars," Mnuchin said.
"But on the other hand, the president is perfectly willing to defend our interests," he said.
Mnuchin said he was “cautiously optimistic” an agreement with Beijing could be reached to avoid a deeper trade skirmish that could upset the global economy.
The White House has delivered mixed messaging this week on its plans to negotiate with China while threatening billions in tariffs on their imports.
“The good news is, President Xi [Jinping] and President Trump have a very good relationship,” he said.
“They speak regularly. There is clear understanding that we have mutual interest in reducing the trade deficit, something that China has agreed with us."
Mnuchin said that while U.S. officials are in regular communication with the Chinese, "I’m not going to comment on where we are in negotiations.”
Meanwhile, White House National Economic Council Director Larry Kudlow told reporters at the White House on Friday that negotiations with China over the tariffs have yet to start.
“The U.S. may provide a list of suggestions to China,” Kudlow said. He said that Washington and Beijing could resolve the trade dispute within three months.
With tensions rising, stocks took a hard hit on Friday, with the Dow Jones industrial average losing 572 points amid fears of a trade war.
"I think we can manage this without significant difficulty to the overall economy," Mnuchin said.
He did say that if the U.S. and China get into a trade war that there are certain sectors of the economy, such as agriculture, that would require attention.
"We have ways of dealing with that," he said.
The U.S. and China have traded tariff threats in the past week, ratcheting up tensions between the world's two largest economies.
Chinese Commerce Ministry spokesman Gao Feng said Friday that China is ready to "hit back forcefully."
The comments come one day after Trump ordered his administration to consider $100 billion in additional tariffs on China.
Kudlow, who only started his new job at the White House this week, has tried repeatedly to calm market fears by arguing "we are not in a trade war."
Still, he said, that there is a possibility that the trade conflict could cause problems.
“I believe the president will use tariffs. Absolutely. I don’t want to leave any other impression,” he said.