White House expects 'frank exchange' on trade with Chinese official: source

WASHINGTON (Reuters) - Top aides to President Donald Trump look to push a tough line on trade in talks on Thursday with an envoy of Chinese President Xi Jinping, with a White House official saying a frank exchange of views was expected.

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Aides say Trump has been increasingly frustrated by the soaring U.S. trade deficit with China, which was $375 billion in 2017, and is considering slapping tariffs on imported steel and aluminum.

That would raise the prospect of retaliation from Beijing and what some analysts see as a possible trade war.

U.S. Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and White House economic adviser Gary Cohn will meet jointly with Chinese economic adviser Liu He and his delegation at the White House, the official said on Wednesday, requesting anonymity to discuss the meeting.

“We expect a frank exchange of views on the trade and economic relationship, and that talks will focus on the substantive issues,” the official said.

There was no plan for Trump himself to meet Liu but officials did not rule it out if progress was being made.

White House officials say China has shown little inclination to take steps to reduce the trade deficit in a way that would satisfy Trump and that he is now demanding action.

The U.S. Commerce Department on Feb. 16 recommended that Trump impose stiff curbs on steel imports from China and other countries and offered the president several options ranging from global and country-specific tariffs to broad import quotas.

A blanket tariff on steel would cover every steel and aluminum product entering the American market from China.

A source close to the White House said Trump had expressed interest in imposing a tariff on steel imports of at least 24 percent. The White House said no final decision had been made.

”I don’t think we’ve ever had a better relationship with China than we do right now,“ Trump told reporters last Friday. ”The only thing that can get in its way is trade, because it so one-sided, it’s so lopsided.”

Reporting by Steve Holland; Editing by Tom Brown