Jamieson Greer Says US Trade Push Goes Beyond China As Allies Target Excess Capacity Across Asia

In an interview with CNBC, Greer said the U.S. and its trading partners have agreed to share information and coordinate action against industrial overcapacity.

• Greer added the specific measures remain undecided.
• He identified Vietnam and China as economies whose export-led factory expansion could contribute to excess capacity.
• Greer said the U.S. trade deficit with China has declined, while its deficit with Vietnam has increased somewhat, partly due to electronics.

U.S. Trade Representative Jamieson Greer said on Thursday that the Trump administration is broadening its focus on industrial overcapacity beyond China, pointing to Vietnam and other Asian economies whose export-led growth models could be contributing to the problem.

In an interview with CNBC, Greer said the U.S. and a group of trading partners had agreed to share information, cooperate and coordinate action against excess industrial capacity. “It's the EU. It's Japan. If you count all the EU countries, it's 36 countries that agree with the United States that there's overcapacity largely in Asia and it's negatively affecting us,” Greer said.

He added that the participating countries had agreed to coordinate their response, although the details of any action remain unsettled. “Now, what that looks like in practice has yet to be seen,” Greer said.

US Expands Focus Beyond China To Excess Capacity Across Asia

Greer identified Vietnam alongside China when describing the risks associated with export-led industrial expansion. “When you have a country like China or Vietnam, and they're building factories with an eye to just building them for employment or investment or export growth, without an eye to increasing their domestic consumption or going off of market demand, you end up with excess capacity,” he said

Greer questioned how long Vietnam's model could remain sustainable, while acknowledging that the U.S. trade deficit with Vietnam has increased somewhat even as its deficit with China has declined. “Our trade deficit is substantially down with China. It's gone up somewhat with Vietnam. Some of that's electronics,” he said.

Greer Flags Chinese Goods Routed Through Third Countries

Greer also flagged how Chinese products were reaching the U.S. through third countries after undergoing limited assembly, potentially allowing them to qualify for different tariff treatment. “You get Chinese inputs or goods to a third country. They do a little screwdriver work, a little assembly work, and they send it to us,” he said.

According to him, such arrangements can complicate efforts to distinguish goods produced in a third country from products that rely heavily on Chinese inputs. Greer said the administration was working to address these trade flows as it seeks to reduce the U.S. trade deficit with China and diversify its import sources.

U.S. equities trended lower in pre-market trade after reports that the White House had asked the Pentagon for military strike options against Iran, sending oil prices higher and pushing Treasury yields back toward recent highs.

The SPDR S&P 500 ETF (SPY) fell as much as 0.40%, the SPDR Dow Jones Industrial Average ETF (DIA) slipped 0.70%, and the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) moved 0.67% lower. Retail sentiment around SPY on Stocktwits continued to trend in ‘extremely bullish’ territory over the past day. 

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