>> the house committee hearing on pharmaceutical prices is in recess for house votes. this is live coverage on c-span3. coming up at the top of the hour, we'll take you live tie house hearing on immigration with officials from customs and border protection, immigration and customs enforcement and citizenship and immigration services will testify. the house homeland security subcommittee hearing scheduled to start at 2:00 p.m. in about 20 minutes from now on c-span3. then this evening, former national security adviser to president trump, h.r. mcmaster, will participate in a debate about the role of china and whether it poses an international threat. that live coverage from toronto of the biannual mock debates starts at 2:30 eastern on

c-span2. later on q & a, the book "a good american family" catches the peril of the 1950s through his family's own ordeal. on c-span3 on q & a. >> we're here to talk about the ongoing trade talks in china. good morning to you. >> good morning. >> the talks continue this morning. what do we expect? >> they're working on a very tight clock. if they haven't come to an agreement by 12:01 friday by midnight, the united states will impose very heavy tariffs on china. are we going to deepen and broaden what will be known as a trade war tomorrow morning. >> where does america stand?

>> they said they had a fairly tightly negotiated 150-page agreement with china which involves china making changes to the structure of the aspect of the chinese economy that the united states has been requesting for decades. last week when they were in beijing, china started to walk some of those back, and we have since seen a version of that 150-page agreement that redakct many chinese promises. the question is whether china is prepared to walk back some of its walkbacks and get to a deal we decided a week ago. i think they should be willing to do some of that because they're talking to americans today. both sides want a deal. >> and so you want to concede on some of those previous arrangements? >> that is, indeed, the question. president trump has been talking very tough since his sunday tweets in which he threatened

further negotiated. the president wants a deal, but he also knows a weak deal, which is a promise to buy more american goods, and big promises to change some of these structure issues that involve state property health. it still involves a relatively close chinese economy. he does -- at the same time you can't doubt his will to do that if he doesn't think the chinese will come through. >> when it comes to economies, if these new tariffs take place, what's the largest sec nor ttore united states that will be affected? >> at one minute past midnight

tonight, donald trump said there were elevated tariffs at 10%. those will go to 25% and that will hit fruits, vegetables, some security products. president trump has also threatened in the very near future to impose 25% tariffs on the 325 billion of american imports from china that hadn't had tariffs so far. >> there are ongoing talks about trade with china. the "wall street journal" highlighting some of those consumer goods kborimported in , things like metals and furniture, bedding, lighting. >> there are part of the

manufacturing processes that get finished in the united states. we haven't hit clothing. we're careful to have tariffs for things like medical care. this is going to hurt both the chinese and the. bho thinks they get hit more heavily. >> if you want to give yourltd -- when it comes to the chinese economy k then, what's the potential damage on their side. >> up to about -- the problem the chinese have, because we ever a trade deficit, they export more from the united states than they import to the united states. they run out of american imports for tariffs.

they are more exposed to our market than we are to theirs in that sense. so they have to look for other ways to retaliate. they can go for a much higher level of tariffs and they can really go back to companies or industries. general matters, apple, they make most of their profits in china. and china has various ways to make that business far harder for specific american corporations. china has been very hesitant to do that so far because it hurts china as well. it makes china seem like a bad pla place. china could, for. president trump wants to see a healthy stock mark. they want their design off the table for the 2020 elections. both sides want to wrap it up but neither donald trump nor xi

jinping can afford to look weak. >> thank you very much for taking my call. i'm not an economist, but i was just wondering, no one seems to mention, what impact does china's erode initiative have on the economy, and also, china is prepared to open an arctic silk road once things get going. i haven't heard anyone speak about that. thank you. >> you may have to explain also those things. >> sure. what china calls its belton road initiative is a program of china's norms recall and sort of creating a fighting-centric

regime in the middle of that very vast to build very mixed record to date. there is no great shining success yet from these loans. there are one or two stark failures but china is also adjusting its lending. so if you mean what effect do those chinese loans have on the american domestic economy right now, the answer is that it is not a big factor in the american economy for now. the longer term question for the united states is that if china's lending program succeeds, and if we see a far more integrated, what is times called the world island, africa, asia, eurasia, and china plays a major role in that, where is the united states in that very important process? within 20 or 30 years, about 80% of the world's middle class consumers will be in eurasia and africa. and if china is the leader

there, china becomes the world leader. and this is a geo strategy question, more than a question for the american economy right now. you also mentioned the arctic and china's ambition to create what it calls an arctic silk road and you're quite correct that china has announced this, in fact, they have published what is called a white paper, which lays out china's ambitions. people are talking about this. secretary of state pompeo just made a real sort of stem winder of a speech accusing china of wanting to use arctic transport to build its world power. he made this speech in finland to the arctic council. so the white house is paying a great deal of attention to this. china is not a member of the arctic council. it is not an arctic nation. so it can only carry out. so things it would like to do in the arctic if arctic council of nations which obviously include the united states and canada agree for them to do so. >> from austin, texas, tanicia, good morning, you're up next.

>> good morning. hi, so i want to touch on the international affairs budget on this topic. the international affairs budget is relevant to programs of diplomacy and development, and what i just heard, from you talking about the crucial geo strategic implication of china, china's trade ambitions, i would like to know how the international affairs budget's diplomacy and diplomatic programs could be of use to solve this kind of issue. >> sure. the white house in its budget proposals has, under the trump administration, has been cutting back on the state department's budget. that's diplomacy. and also on the proposed usaid budget and that has to do with foreign aid programs. so there has been pressure from the white house to cut down on

traditional means of diplomacy and aid. however, the hill, congress, has been fighting back fairly hard against that. including republicans in the senate and the house who feel that diplomacy is very important. so there is constantly a struggle on the budget side. the administration, while it's been curbing traditional diplomacy, has been taking some encouraging actions of the previous caller susan asked about china's belt and road initiative, its lending program that we just discussed, congress has passed the build act, which is going to make up to 60 billion in additional funds available through united states government agencies, for, we hope, high quality loans, for infrastructure, and other development projects, that will be competing in some ways with chinese loans in the area. so the white house has been trying to cut back on traditional diplomacy, but it is increasingly taking other actions to strengthen the united states geo strategically

vis-a-vis china. and this is developing very rapidly. it is hard to characterize it so far as adequate or inadequate but we do know that china is able to bring far more lending capacity to the global development than the united states is. so really to date, it is a competition between what america calls quality lending, meaning loans that can actually be paid back, because they're based on bankable prompts that will have a profit, american quality, transparent governance, environmental sensitivities, protecting labor rights, versus chinese quantity. china has far more dollars in the bank, but it is critiqued for low quality lending. so watch this quality versus quantity competition. >> here is eddie, he's in indiana, eddie, good morning. >> caller: good morning, guys. i got to comments on all of this. every time i hear about these trade war deals, it is always the cost of things going up for

the american consumer. three weeks ago, i believe, i can't remember which channel it was on, they was talking about the united states exported more oil than it ever has, in the last probably three weeks, the price of gasoline here in indiana, or at least in my area, has went up 20 cents. so i don't see any problem with putting tariffs on chinese goods, and pbs run a deal the other night on what you all, or what this is talking about, and it is like this has been going on for a long time, guys, it is time, it is good thing our president is going to fix all this. and thank you guys very much for hearing my call. >> you're referring to the pbs frontline program, they did, together with npr, a story on the trade frictions to date. and there's one sense in which you're right, when we speak of trade war and use these marshal metaphors, it sounds very dire, but for most american consumers

to date, what trade war means is that the prices of some of the stuff that we buy and sell with each other goes up a little bit. but it could get considerably worse. for example, oil and liquefied natural gas sales from the united states to china have actually been going down slightly, and if we impose all of the tariffs that president trump is talking about imposing, this will have an impact on the global economy and the global supply chain such that oil and liquefied natural gas sales are likely to continue to go down. does that necessarily mean that he would be wrong to impose those tears? no, because what these economic frictions are actually part of a much larger long-term competition between the united states and china. >> forbes highlighting one of those issues that might center on some of americans, that it can relate to is washing machines. >> sure. washing machine, sort of white goods, more broadly, all kinds of technology, clothing and apparel, that the chinese will

be very tactical, very careful in imposing further tariffs. in the previous rounds of tariffs, they went after soybeans and american agricultural goods and also things like bourbon. because they knew that voters in kentucky and voters in iowa and the other states that produce a lot of soybeans tend to support president trump. so they are going to go after the industries in the northern industrial belt and the agricultural areas precisely to put pressure on president trump, and that will be even more true in the coming days, if we escalate the tariffs. so they're very tactical and very political, in their imposition of pain on the united states consumers and producers. >> this is robert daly of the wilson center joining us to talk about these efforts between the united states and china on trade. and in washington, d.c., you're up next. >> caller: yes, i'm calling, you mentioned a very, you mentioned the soybeans, i was wondering,

how is that outcome? we heard a lot about it when china, when the president, i think used the soybean industry to punish, i guess, china, but how is that affecting us? what's going on? you don't hear much about specifically, are they just rotting in barns? or what? >> so it is not that the president uses soybeans to punish china, it is that china puts tariffs on soybeans, to punish the united states. so china had been our largest export market for soybeans. china has now put a heavy tariff on those, and is importing more of its soybeans from brazil which means that enormous parts of agricultural america have lost their major market. and so the price of soybeans drops. soybeans are even sitting unsold or marketed at prices that are not viable for our manufacturers, in the midwest.

so you're right, you're calling from washington, and washington, d.c., which i don't think plants many soybeans, due feel it so much, but it is absolutely a core industry for entire states and regions in much of the united states, so this is a case of china punishing us, and for that reason, farmers have been encouraging the white house to try to settle this and open their markets back up, because they have become fend ent on them. >> and so robert daly in the "the wall street journal" this morning, there were comments made in a story, take a look at this issue by mick mulvaney, he said we're close to getting something done so we will keep going but on the other hand you throw up your hands and this is not going anywhere. what happens if that latter part happens? we know the new tariffs will go into place but what's the long term after that? >> i think if all of the new tariff goes in place, both the 10% to 25% on 200 billion, 25% on an additional 325 billion, then it gets much harder for president trump to say that, you

know, despite all of this, xi jingping is my near and dear friend and we respect each other. that really throws down the gauntlet, and makes it hard for either beijing or washington to paper over the fact that this is a long-term, comprehensive competition between two nations, beth of which are seeking to, you know, maximize their own interests but are also seeking a certain kind of prime sy in the east asia pacific and globally and so we are entering in, i think, no matter where these talks go, even if there is a resolution today, what most americans and most chinese i think have not yet realized is this is going to change many aspects of their nations, i don't think it is yet a new cold war, i think we can avoid it's becoming a cold war, but if you think back to that period where the friction with the soviet union was really part of the air that we breathed in the united states, some of our listeners will remember that, but many of them will, this is going to affect many aspects of american

and chinese life and it is something that a lot of other nations will be caught up in. the question is whether we can manage it and contain it within the economic sphere, can we have reasonable discussions over global rules and norms, can we avoid conflict, and we can and we should. whether we will remains to be seen. >> china, a major holder of the u.s. debt. does that come into play at all? >> i think this is overplayed. china and japan in recent years, they go back and forth for the status of the major foreign holder of american debt. most american debt is held by americans. things like pension funds, here in the united states. china has, actually hovers around 7% of our total debt. so this notion that they are our banker and we can't offend them or they will cease to be our banker, this is somewhat exaggerated. china also doesn't buy that debt as a favor to us. they do it for themselves. because of their trade surplus with the united states, they need somewhere to park all of those u.s. dollars. and they're buying american

treasuries, american debts, it is actually a vote of confidence in the united states because they think that's the most reliable place to park their u.s. dollars, their foreign exchange reserves, at a rate of interest that makes sense for them. if they sold all of that off immediately, as a means of retaliating against the united states, then the value of all of those chinese assets would plummet and they would hurt themselves so i don't think that is a major issue. >> orange, connecticut, up next, this is linda, hi. >> caller: yes, good morning. mr. daly, i'm fascinated with your touch on the topic of quantity lending versus quality lending. and my question is, on the lending, be it the united states or china, are these projects in china, where there' for instance, lending money to ford to build a plant there, or are they lending projects here in the united states, where chinese assets are being used to build

american infrastructure and providing american jobs? i find the whole thing fascinating. could you touch on that a little further, sir? >> sure. >> thank you. >> so we're mostly talking about lending for projects that are n neither china nor in the united states. these are projects in central asia, which is very undeveloped, in southeast asia, and africa, in eastern europe, and indeed, in western europe. and some of these are construction projects. some of them are chinese management projects. but it may be that sort of the big picture is what we may be seeing in this century is the integration of eurasia and africa, through infrastructure. you know, eurasia has never been integrated. we've really had europe. we've had different parts of what we call asia. asia being not a terribly useful phrase for us to use. but now, we have the technical and perhaps the financial capability to really have transcontinental networks that

link up markets, producers and consumers, throughout africa, and eurasia, and so the question is, who is going to finance that construction? who is going to set the rules, because it is not just a question of building roads and railways. you need to have integrated standards for the use of technology what is going to be the backbone of these networks. so is that going to be china that plays a leading role in this major undertaking? or is it going to be a gradual more organic process in which the united states can play a role in setting standards. and it is in that global sphere, and china also speaks of its, what they call their belt and road investments, as including south america, the caribbean, the previous caller mentioned even the arctic. and so this is sort of neither in china, nor in the united states, for the most part, we're talking about a global network, global lending. >> so this is a viewer off of

twitter, jeff, who says the u.s. has renegged on several deals and he puts that in quotes lately, why would china or any other country think of it as long term. >> right. i think what this is probably referring to is the trump administration pulling out of the transpacific partnership agreement. pulling out of the iran nuclear agreement. and so this is a question that is often asked. given the relative ease with which this administration in particular has pulled out of prior commitments, why would china take them seriously? china is under pressure from these tariffs. china finds these somewhere between annoying and threatening, depending upon which aspect of the tariffs we're talking about, and china faces a really daunting domestic agenda. even without the trade war. so it would very much like to take this off the table, even in the short term. i think that china's leaders understand perfectly well that competition with the united states is not going away. but if they can get some tariff relief, even in the short term, it helps them to carry out their

domestic, economic agenda. so they're not going to reach a deal in the next two days, if they do, because they think that it solves every problem. it doesn't. it takes an annoyance off the table in the short term. there will be other annoyances. >> we've seen the president and the white house say well, we get to a point, let's extend it out a week or two. >> and he's done that a number of times even back in december when donald trump and xi jingping met in buenos aires and had a 30-day cease fire in imposing tariffs and that delayed the american escalation of tariffs. we then delayed them again past march 1. china is very good at playing for time in diplomatic negotiations. they're in general i'd say better at it than we are. he has done it before. he can do it again. and they can also see with the renegotiation of nafta and other negotiations of that this administration has entered into we tend to take a maximalist position with a lot of bluster

and then at the end of the day, we settle for minor improvements. we threaten to knock the whole chess board off the table, in the ennui push a pawn one space forward, and say that it is the greatest deal ever. so of course, china is trying to calculate, what's the very least we can offer to get the trump administration to call it a day? >> from tennessee, in knoxville, michael, go ahead, you're on with our guest. >> caller: hi, i'm curious how we're going to close trade deficits in asia and africa where we're competing with china if we're cutting the international trade administration's budget? from what i understand, the commercial service, an agency within ipa, brings back 298 dollars for every dollar invested in their agency and they do that through stimulating export sales. how are we going to close those gaps? >> well, the trump administration's plan would seem to be one, to force china and presumably other nations through subsequent negotiations to buy

more american goods but then probably more importantly, through these kinds of pressures, to bring more american manufacturing that has gone overseas, over the past several decade, and especially since china's secession to the world trade organization in 2001, to bring more of that manufacturing back to the united states. now, that seems broadly to be the plan. the issue with that is that it ignores the fact that we already have a global supply chain, which is very deeply entrenched. and which isn't accounted for in the current plans. under the old, but still existing rules of origin, the company that does, it is very complicated but broadly speaking, the company that finishes a product, and then exports it for sale to consumers gets to put made in china, made in taiwan, made in the usa, on that product. but that's very misleading. so a lot of this stuff that you see that says made in china, especially high-tech, things like iphone, actually most of those components are made in

places like taiwan, or south korea, these are american allies, or in the united states. it is a global supply chain. these various components then go to china, which does final assembly on say iphones, and gets to say made in china, but actually most of the value of that product, most of the profit is not made in china. so when we put tariffs on a lots of these goods, we are actually imposing additional costs on our allies and on ourselves. most of those made in china iphones, most of the profit from those is realized by the people who design it, the people who market it. that's the united states in both cases. the united states gets most of the profit from made in china iphones. and when we put tariffs on china, we're not only hurting china, we're hurring allies and ourselves. so the probably is problem is how do woe try to balance trade while addressing the global supply chain. >> this is vic in saratoga,

california. >> caller: hi, i think the tactic of using tariffs is very counterproductive. i think we should focus on aid in the developing world. and focus on getting people out of extreme poverty. because if they're out of extreme poverty, like through things like food assistance, or -- >> we are going to leave this recorded segment of washington journal, with a quick reminder that you can watch all of our programs online at c-span.org. we're going live now to capitol hill for a house budget hearing on immigration and border security, we will hear from customs and immigration officials at the homeland security sub committee hearing. >> u.s. immigration, and customs enforcement, and u.s. citizenship and immigration services. i want to thank the administration officials who came here this morning to testify and provide additional details about their priorities and programs for the coming fiscal year. we're going to be frank with everyone here today this. budget rue