Update: according to Axios, during the US delegation's trip to Beijing two Fridays ago, Navarro "blew up" at Mnuchin over his decision to participate in one-on-one talks with his Chinese counterpart Liu He. Navarro cursed at Mnuchin and fumed about being shut out of the talks, the sources said.
- "It stems from his belief that Mnuchin is steering them down the wrong path, policy-wise, with China," said a source familiar with their interactions.
- On the same trip, Navarro also blew up at Commerce Secretary Wilbur Ross, according to a source with direct knowledge.
- Navarro and Ross have a long-standing feud that is more complicated, rooted in both policy and stylistic differences, according to sources familiar with their interactions.
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Back in late February, we noted something that few at the time noticed: Trump had just promoted "populist" trade-hawk Peter Navarro to the rank of assistant to the president. What happened shortly thereafter shook the administration, as first Gary Cohn resigned in very short order, and just days later Trump launched trade war against China and many other nations with which the US has had a trade deficit.
We went so far as to declare a victory for the populists over the globalists in the Trump inner circle.
Well, not even three months later, following some behind the scenes discussions between Trump and Beijing which have yet to be disclosed, it appears that the globalists are back in control as Trump's main China trade adviser, author of "Death by China" and "Crouching Tiger: What China's Militarism Means for the World" and unrepentant trade hawk, Peter Navarro, has been excluded from talks tomorrow with China’s top economic envoy aimed at defusing a brewing trade war with the U.S., Bloomberg reported citing two administration officials.
As we reported this morning, Vice Premier Liu He, who is also Xi Jinping's special envoy, will meet with Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross.
So why is Navarro, arguably the architect of Trump's entire China trade policy, being left out? According to Bloomberg's sources, Navarro has "lately behaved erratically and unprofessionally" and "his exclusion from the meeting marks another downturn in his White House career, where he was long isolated by other top officials before the president promoted him earlier this year to his top rank of aides."
Navarro didn’t immediately respond to a request for comment. The two officials didn’t elaborate on Navarro’s behavior.
The officials said Navarro wasn’t a team player when the U.S. sent a delegation led by Mnuchin earlier this month to Beijing to meet with He. President Donald Trump has proposed at least $50 billion in tariffs on Chinese goods to punish the country for what he considers unfair trade behavior, including its acquisition of U.S. technologies. China has threatened to retaliate for the tariffs, which could be imposed after a public comment period ends May 22.
Navarro's sudden exclusion would also explain Trump's sudden U-turn on ZTE, and - all else equal - would suggest that the "globalists" are back in control of US trade policy, which means that first China, then the EU, will gradually be able to normalize trade relations with the US, as Trump's threats of tariffs quietly fade away into nothing.