Trump strikes back at Chinese tech practices with new tariffs

- Maret 22, 2018

President Donald Trump will escalate economic tensions with China by unveiling on Thursday extensive new trade restrictions that would effectively block $50 billion in Chinese imports from entering the United States.

Trump will direct his administration to take action that will likely result in tariffs on a proposed list of 1,300 products as punishment for Beijing's intellectual property practices, senior White House officials said ahead of the announcement.

The officials said the list of targeted products will largely focus on technology China is accused of forcefully taking from U.S. companies. The value of that list represents the harm that U.S. companies have suffered from China’s practices, they said.

“What you’ll see is that many of these areas are those where China has sought to acquire advantage through the unfair acquisition or forced technology transfer from U.S. companies with an aim toward establishing its own competitive advantage,” said Everett Eissenstat, deputy director of the White House National Economic Council, during a call with reporters.

Trump's new tariffs are the first strike in a series of planned hard-line trade actions the administration intends to take to counter Chinese policies that U.S. technology companies argue force them to surrender billions of dollars in intellectual property and other proprietary information to gain access to China’s state-controlled economy.

“Administrations before us and this administration have tried very, very hard to work with the Chinese,” senior White House trade adviser Peter Navarro told reporters. “The problem with the Chinese in this case, talk is not cheap, it’s been very expensive to the American people.”


A senior White House official said the value of targeted imports is a “very conservative estimate of harm” because it doesn’t include instances of blatant cyber theft of U.S. technology and trade secrets.

The tariff list will be published within 15 days of the announcement and will go into effect within 60 days after a public comment process, another senior White House official said.

Trump will also direct the Treasury Department to craft new restrictions that would block Chinese companies from being able to invest in certain sectors of the U.S. economy where it has sought to obtain U.S. technology, the officials said.

Unlike tariffs on steel and aluminum that divided Trump’s advisers, Navarro said there is “not an inch of daylight between anybody either within the White House or within the Cabinet agencies on this action. We are united.”

Administration officials have said the level of tariffs applied to the $50 billion in targeted products will largely remove any commercial incentive for China to export those goods, effectively blocking them from the U.S. market. Earlier this month, Trump demanded that China develop a plan to reduce its trade surplus with the U.S. by $100 billion.

U.S. Trade Representative Robert Lighthizer had earlier presented a retaliation package targeting $30 billion worth of Chinese imports, but Trump demanded a larger target amount.

The action has drawn a cautious reaction from Capitol Hill, where lawmakers largely support cracking down on China but not at the expense of U.S. businesses and consumers. Business and agriculture groups have warned that unilateral tariffs will spark retaliation that will stifle job creation and hurt U.S. exporters.

“My continued support is contingent on the president choosing an appropriate remedy,” Senate Finance Chairman Orrin Hatch (R-Utah) said at the start of a hearing on Thursday. “That remedy should be targeted specifically at the perpetrators and beneficiaries of China’s actions, and it must be part of a strategy to correct China’s technology policies.”


House Ways and Means Chairman Kevin Brady (R-Texas) also urged Trump to choose the right remedy, “not one that punishes American families, workers and small businesses by putting new taxes on the products they buy. That won’t change China’s behavior.“

Trump's latest trade restrictions were unveiled just one day before his tariffs on steel and aluminum will go into force on Friday, further antagonizing the Asian superpower and raising the specter of a damaging trade war. Chinese retaliation against U.S. soybeans, aircraft and other exports is now all but certain.

Despite the potential consequences, Trump has been eager to hit China with tariffs to fulfill his campaign pledge to crack down on what he has described as China's trade abuses. Trump blames Beijing for America’s ballooning trade deficit and has consistently held up China's trade surplus with the U.S. — which now stands at more than $375 billion in goods — as a central failing of U.S. trade policy.

The tariffs and pending restrictions on investments would respond specifically to violations of U.S. intellectual property rights and policies that force U.S. companies to hand over sensitive technology to the Chinese government or to Chinese companies as a condition of doing business there.

The move is related to an order Trump signed in August that directed Lighthizer to open an investigation under Section 301 of the Trade Act of 1974. Officials have been examining whether any Chinese laws, policies, practices or actions force American companies to transfer valuable technology to compete in the market or otherwise fail to adequately protect U.S. intellectual property rights.

The 300-page report the administration is expected to release to justify the trade restrictions detailed an aggressive push by China to ramp up its industrial policy to boost the country’s manufacturing sector through government subsidies and other forms of support.

Central to the Trump administration's case that China is siphoning off U.S. innovation is the "Made in China 2025" plan, an initiative Beijing launched to support growth in advanced industries and technologies, such as biopharmaceuticals, robotics and artificial intelligence, electric vehicles and next-generation telecommunications.


 

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