Senate Finance Committee Chairman Chuck Grassley told Yahoo Finance the next round of tariffs on Chinese goods may not go into effect after all.

“What I hear now, is that the prospects of those tariffs going on are pretty slim,” said Grassley (R-IA).

He also said the tariffs that increased to 25% in May would decrease if there’s an agreement with China.

The comments come after President Trump tweeted that he had a call with President Xi Jinping and the two would definitely meet at the G20 this month. The president broke the news shortly before United States Trade Representative Robert Lighthizer testified before the Senate Finance Committee on Tuesday.

“Maybe as a result of all this, we get back to the bargaining table with China,” Grassley said. “They steal our trade secrets, they manipulate their currency...all that stuff I thought we were making tremendous progress for. And then China just stops. So if we can get back to that point, we will really have a good agreement with China.”

In the hearing on Tuesday, Lighthizer told senators the administration is preparing to move forward with the additional tariffs on Chinese goods if no agreement with China can be reached.

Lighthizer called the trade issues with China “the most serious problem you can have in the trade space.”

“What we’re facing is worth having some discomfort,” he said.

Senators pressed Lighthizer on the tariffs’ impact on American consumers and businesses. Sen. Ron Wyden (D-OR) asked Lighthizer about college students — already facing mounting student debt — who may have to pay more for laptops and other school supplies.

“I would say to those college students, if China steals your intellectual property, you're not going to have jobs in the future. Much worse, your children aren't going to have jobs in the future,” said Lighthizer. “So to me, the first question we have to establish is, ‘is China a problem? Is a $450 billion trade deficit with China a problem?’ If you think not, then none of this makes any sense. If you think it does, then you have to do it as cleverly as you can, I confess, and it’s not easy.”

Pelosi ‘knows what she has to do’

Senators also grilled Lighthizer about the status of the revised North American Free Trade Agreement, known as USMCA. Democratic senators pressed him on how to enforce the deal.

Lighthizer told the senators he feels like he’s making progress with Democratic lawmakers in the House — and Speaker Nancy Pelosi has been “fair” and “above board” throughout the process.

Grassley told Yahoo Finance he’s communicating with Pelosi and House Ways and Means Chairman Richard Neal to offer his help on USCMA. Grassley said he thinks the Democratic leadership is sincere in their efforts to negotiate on the trade deal, but they have to get new members of the party on board.

“I think that the president and Ambassador Lighthizer understand the situation she's in, and they are not going to press her. And I don't think it would do any good to press her, because she knows what she has to do — and it's to make new members feel comfortable with the issue,” said Grassley.

Grassley said he thinks lawmakers need to finish the trade deal before the August recess or shortly after, or it will carry over into the 2020 election.

“It’s necessary to get it done very, very soon,” said Grassley.

‘Maybe the president will not like our bill’

Sen. Bob Menendez (D-NJ) grilled Lighthizer on whether it was appropriate for the president to threaten Mexico with tariffs as a way to address an immigration issue.

“Absolutely,” said Lighthizer. “If you get to the point where you think it's a national crisis, a national security problem, you do what you have to do."

“I think the president should follow the law, and he didn't consult with Congress before doing it and that's required,” said Grassley, when asked about Lighthizer’s response.

Republicans are working on legislation to curb the president’s authority to impose tariffs based on national security. Grassley is leading efforts to combine two existing Republican bills, into compromise legislation.

“I think we're getting very close, but we haven't nailed it down yet,” said Grassley.

Grassley is working to build enough support for a veto-proof majority.

“We also have to get Democrats comfortable with it, because if we don't have a strong vote out of committee, we won't have a strong vote on the Senate floor. And you can imagine that maybe the president will not like our bill, so we have to be prepared if he doesn't like our bill.”

When asked when he’d like the bill to be ready, Grassley answered “oh, yesterday.”

Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.

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