President Donald Trump will host Chinese President Xi Jinping for talks next week in Palm Beach, Fla. | Getty Trump seeks action on trade gaps ahead of Chinese president's visit

President Donald Trump will sign an executive order Friday instructing his administration to examine the causes of the U.S. trade deficits with China and other major trading partners and report back to him within 90 days for possible action to reduce the gaps.

"This will represent the first systematic analysis of what are the causes [of the deficit] country by country and product by product,” Commerce Secretary Wilbur Ross told reporters at the White House Thursday evening. “It will form the basis for decision-making by the administration subsequently and that will be decision-making that will be based on hard facts, not theories.”


Trump, who is hosting Chinese President Xi Jinping for talks next week in Palm Beach, Fla., also will sign a second executive order directing Homeland Security Secretary John Kelly to strengthen the collection of penalties on unfairly traded foreign products.

Both Ross and White House National Trade Council director Peter Navarro insisted the executive orders were not intend to send a message to China ahead of the Xi meeting, even though Trump railed against China’s trade practices during the presidential campaign and the U.S. trade deficit with China, which totaled $347 billion in 2016, is far larger than that with any other country.

“Nothing we’re saying tonight is about China,” Navarro told reporters. “Let’s not make this a China story. This is a story about trade abuses.”

At least $2.8 billion in penalties on unfairly traded products have gone uncollected since 2001 as a result of importers evading the payments, Navarro said. China accounts for much of the problem since about one third of the more than 340 existing U.S. anti-dumping and countervailing duty orders currently in place are on Chinese goods.

“This is a big deal” since the under-collection of duties denies a variety of U.S. producers the relief they have legitimately won against unfair foreign trade practices, Navarro said. “It’s steel, chemicals, agricultural products. It’s the whole gamut.”

Ross identified more than a dozen countries that will come under intense scrutiny in the report because of the size of the U.S. trade deficit with each of them.

Those include Japan ($68.9 billion), Germany ($64.9 billion), Mexico ($63.2 billion), Ireland ($35.9 billion) and Vietnam ($32.0 billion), as well as Italy, South Korea, Malaysia, India, Thailand, France, Switzerland, Taiwan, Indonesia and Canada.

“This is not meant to say that everybody on this little list is an evil doer. That’s not the case,” Ross said, noting there are some legitimate reasons why the United States runs trade deficits with some countries.

The report prepared jointly by the Commerce Department and the Office of the U.S. Trade Representative will examine the degree to which each of the trade deficits are caused by “cheating or other inappropriate behavior,” Ross said.

But in a nod to Trump’s criticism of NAFTA and other trade agreements, the report will also look at whether the bilateral deficits are the result of free trade deals falling short of expectations or policy decisions made by previous administrations, he said.

The report will also examine whether other factors such as currency misalignment, foreign excess capacity or constraints imposed by the WTO on the United States have contributed to the bilateral deficits, Ross added.

Trump is ordering the report on the same day that the USTR is due to release its annual report on foreign trade barriers around the world. That publication runs nearly 500 pages and examines the trade practices of more than 60 trading partners, but it does not attempt to calculate how they contribute to the trade deficit.

The new report could provide useful ammunition for the administration as it follows through on campaign promises to more aggressively go after unfair foreign trade practices, including by drawing on trade remedy tools that have not been used in decades.

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That includes one provision known as Section 301, which allows the White House to unilaterally retaliate against unfair foreign trade practices. The United States voluntarily stopped using the measure when the WTO came into existence in 1995.

The rest of the world might worry the report raises the prospect of the Trump administration launching a multi-front trade war, but Ross said it showed the White House was determined not to run half-cocked.

“It will demonstrate the administration’s intention not to hip-shoot, not to do anything casual, not to do anything abruptly, but to take a very measured and analytical approach, both to analyzing the problem and therefore to developing the solutions for it,” he said.