UK trade chief sympathizes with Trump's concerns on China — but says the strategy is not right

  • Speaking at 10 Downing Street, the U.K.'s International Trade Secretary Liam Fox said he "understands" the U.S. reservations related to Chinese overproduction, Chinese market access, and also the funding shortfalls by some NATO countries.
  • "We have got sympathy with that. Where we have our difference is the mechanism applied to that," Fox told CNBC's Steve Sedgwick.

Donald Trump's concerns over international trade are understandable but the U.S. president is choosing the wrong approach to level the playing field, the U.K.'s trade chief told CNBC Wednesday.

Speaking at 10 Downing Street, the U.K.'s International Trade Secretary Liam Fox said he "understands" the U.S. reservations related to Chinese overproduction, Chinese market access, and also the funding shortfalls by some NATO countries.

"We have got sympathy with that. Where we have our difference is the mechanism applied to that," Fox told CNBC's Steve Sedgwick.

In response to China's metal production, the U.S. president recently implemented tariffs aimed at protecting domestic product. Trump also decided to implement metal tariffs against European, Japanese, Canadian and other allied nations.

Liam Fox, U.K. international trade secretary, speaks at the American Enterprise Institute in Washington, D.C., U.S., on Monday, July 24, 2017.
Eric Thayer | Bloomberg | Getty Images
Liam Fox, U.K. international trade secretary, speaks at the American Enterprise Institute in Washington, D.C., U.S., on Monday, July 24, 2017.

The U.S. used section 232 of the Trade Expansion Act which essentially implements penalties because of perceived national security threats. The allied countries disagreed with this basis to apply these extra duties. It sparked a sharp response from those nations, who also argued that the metal overproduction is caused in China and not by them.

"We think to use the 232 mechanism is not an appropriate vehicle, because it has resulted in us all spending a lot of time on blue-on-blue action between allies and not addressing the source of the problem," he added.

Trade tensions rose another level earlier this week, after a meeting between the seven leading global economies. Trump revoked his support for a joint statement after the meeting, following comments from Canadian Prime Minister Justin Trudeau that he would be pressing ahead with retaliatory tariffs against the U.S.