Treasury Secretary Jack Lew cautioned on Tuesday that a sudden flurry of protectionist measures around the world would stifle the global economy.
Lew, whose tenure in the Obama administration ends on Friday, said free trade much be protected because it not only has helped the U.S. economy grow but has led to a more peaceful world.
{mosads}“If we were to see, around the world, a proliferation of new barriers, what we’d see is a lessening, a slowing down, of global growth,” Lew told CNBC’s Squawk on the Street.
Lew said the Obama administration has insisted on high labor and environmental standards during their trade negotiations.
“That’s the way to approach trade, not by just erecting barriers, either tariff or non-tariff barriers,” he said.
President-elect Donald Trump has threatened to impose a 45 percent tariff on Chinese imports and high tariffs on other nations like Mexico and on companies that move operations overseas but sell their products back into the United States.
In a Wall Street Journal interview on Friday, Trump said he wanted to reset the trading relationship with China saying that “everything is under negotiation.”
“The biggest problem we have is China is so horribly imbalanced in trade with us,” Trump said. “It’s so one-sided that if you brought it down even to fairness, just fairness … it’s a tremendous amount of money.”
Lew’s sentiments echoed those of Tom Donohue, the head of the U.S. Chamber of Commerce, who warned last week that enacting trade barriers could harm the U.S. economy.
Since his surprise election in November, Trump has continued to harp on China’s trade and foreign-exchange rates practices. He has vowed to label Beijing a currency manipulator early in his administration.
But Lew said the U.S.-China partnership is the most important economic relationship in the world and must be nurtured.
“I think that one has to engage with China across the broad spectrum of issues that we deal with China on and push very hard to make progress, but also recognize when they move in a positive direction,” Lew said.
“That’s what we’ve tried to do,” he said.
Besides being an economically vital relationship “in terms of being two superpowers, it’s geopolitically a very important relationship,” Lew said.
Lew, who said he has been to China about a dozen times and met regularly with his Chinese counterparts here many times, said that Obama administration officials have pushed Chinese leaders very hard to open their markets, stop manipulating their currency and eliminate domestic supports.
“I think we’ve made a lot of progress,” Lew said. “They’ve moved to their currency to the point where they’re now actually intervening to protect their currency, not to drive it down. Because a rapid decline in their currency would actually both violate agreements and be bad for them,” he said.
“They’re opening their markets, though not as quickly as we would want.”