BUENOS AIRES — A top Treasury Department official on Sunday suggested a key strategic relationship between the Trump administration and the Chinese government had been severed, only to reverse himself a few hours later.
The episode, which played out on the eve of tense trade-related discussions between international finance ministers, shows just how treacherous the U.S. government’s standing has become, as a growing number of countries have accused the White House of protectionist policies that could lead to isolationism.
President Trump in the past week has leveled trade threats against the European Union, Japan, China, Germany, South Korea, and Canada. Every time his aides try to soften his threats, he ups the ante.
On Sunday, though, it was an aide who caused the international incident.
David Malpass, the Treasury Department’s undersecretary for international affairs, told a conference of bankers here that he had ended the U.S.’s “Comprehensive Economic Dialogue” with Chinese officials because discussions had stalled during a meeting in 2017.
The reasons for the tensions are complex and have to do with the Trump administration alleging Chinese leaders are exerting too much government control over the economy.
“Because there wasn’t a path back towards a market orientation … I’ve discontinued the comprehensive economic dialogue,” Malpass said at the conference, which was hosted by the Institute of International Finance. This had never been done before and his comments came at a time when relations between the White House and Beijing are tense.
Trump is readying a large package of tariffs that he wants to impose on the Chinese economy as soon as next week, people briefed on discussions said, a plan that has many world leaders concerned about an escalating trade war. Malpass’s comments, which had not been revealed before, appeared to take this to another level.
Many other foreign leaders have agreed with the U.S. government in the belief that China should do more to move its economy towards a market-based system, but they are also watching for signs of the Trump administration pulling back from international relationships, and Malpass seemed to signal that a new step was being taken.
It was also remarkable that someone like Malpass, who isn’t known for revealing new U.S. policy, would make the comments during question and answer period of his remarks, and not defer to Treasury Secretary Steven Mnuchin, who had not yet arrived in Buenos Aires.
But Malpass’s comments were picked up by news reports, and the Treasury Department tried to quickly contain the damage. Treasury’s assistant secretary for public affairs, Tony Sayegh, wrote in a Twitter post that “Treasury has not discontinued the US China Comprehensive Economic Dialogue.”
Sayegh hadn’t even arrived in Argentina when he wrote that message, showing how Treasury was trying to move quickly to contain the damage.
Later, Malpass told reporters that he had misspoken earlier.
“There hasn’t been a decision on the future” of the relationship, he said. “There hasn’t been a decision about another meeting.”