Trump orders tariffs on $200B more Chinese goods

President Donald Trump on Monday raised the stakes in a growing trade dispute with China, ordering trade officials to draw up a list of $200 billion worth of Chinese goods that would be hit with an additional 10 percent tariff.

The move, which drew a strong response from Beijing, follows China’s announcement that it would retaliate in kind to Trump’s initial decision last week to hit $50 billion worth of Chinese goods with a 25 percent tariff. That stemmed from a U.S. Trade Representative investigation that determined Chinese theft of U.S. intellectual property and forced technology transfers threatened to undermine U.S. competitiveness.

“This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance in goods,” Trump said in a statement. “This is unacceptable. Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States.”

The Chinese Commerce Ministry, in a statement translated for POLITICO, blasted the action as an example “of extreme pressure and blackmail” by the Trump administration that flouts international norms for handling trade disputes.

“If the U.S. side becomes irrational and issues a list, China will have to adopt comprehensive measures combining quantity and quality to make a strong countermeasure,” the ministry said. “The United States initiated a trade war and violated the laws of the market. It did not meet the current development trend of the world, harmed the interests of the people and enterprises of China and the United States, and harmed the interests of the people of the world.”

Trump also promised to keep upping the ante if China retaliates to his latest action. He said he would pursue additional tariffs on another $200 billion worth of goods, for a grand total of $450 billion. That would encompass roughly 90 percent of the $505 billion worth of goods that China exported to the United States in 2017.

In contrast, the United States exported only about $130 billion worth of goods to China last year, so Beijing has far less room to raise tariffs in a way that would immediately affect trade.

Still, U.S. companies had $92.5 billion worth of investments in China as of 2016, many of which could face retaliation by Chinese regulators if Beijing is looking for ways to exert pressure on the United States. Chinese officials have promised to respond accordingly if Trump continues to ratchet up tensions.

U.S. Trade Representative Robert Lighthizer, who spearheaded the investigation leading to Trump’s initial tariff threat, put out a statement saying he supports the president’s latest move.

“The initial tariffs that the president asked us to put in place were proportionate and responsive to forced technology transfer and intellectual property theft by the Chinese,” Lighthizer said. “It is very unfortunate that instead of eliminating these unfair trading practices, China said that it intends to impose unjustified tariffs targeting U.S. workers, farmers, ranchers and businesses. At the president’s direction, USTR is preparing the proposed tariffs to offset China’s action.”

However, he emphasized no additional duties would be imposed until they have gone through a legal vetting process, which includes taking comments and holding a public hearing.

Trump’s proposed new duties, as with the initial tariffs, alarmed the U.S. business community.

“As we’ve said before, tariffs — at any amount — will not fix the problem of China’s unfair practices. We urge the administration to change course and to instead work with our allies on a focused, sustained strategy,” a spokeswoman for the U.S. Chamber of Commerce said.

Retail groups also weighed in. National Retail Federation President and CEO Matthew Shay called Trump’s threat to impose duties on $200 billion worth of additional goods “a reckless escalation.”

“This is a global trade war, plain and simple, and the American families will be the ones who suffer most,” added Hun Quach, vice president of international trade for the Retail Industry Leaders Association.

U.S. equipment manufacturers said Trump’s action was “terrible news” that would effectively wipe out all of the gains the industry has seen from tax reform and regulatory relief.

“While the White House is chasing some imaginary trade deficit, it will have very real consequences for the 1.3 million men and women of our industry. We should be creating more jobs, not wiping them out,” said Kip Eideberg, vice President for public affairs and advocacy at the Association of Equipment Manufacturers.

The initial U.S. tariffs are aimed at items such as semiconductors, electronics, plastics and other goods from sectors expected to benefit from China’s “Made in 2025” initiative to dominate the world in technology areas such as robotics, driverless cars and advanced medical devices.

China’s proposed retaliatory tariffs on the United States target farm goods such as soybeans, as well as chemicals, oils and seafood.

The first tranche of the U.S. duties on goods totaling $34 billion will go into effect July 6, with the remaining $16 billion imposed at a later date. China is following a similar schedule.

Trump’s latest tariffs Monday came on the same day the Senate voted to reverse the Commerce Department’s recent move to save Chinese telecommunications giant ZTE by lifting a seven-year ban on the company doing business with U.S. firms, which was imposed after ZTE was found violating the terms of 2017 penalty agreement.

Commerce’s deal, made at Trump’s request after he spoke on the phone with Chinese President Xi Jinping, was strongly opposed by a bipartisan group of senators who see ZTE as a serious national security risk. The company was originally fined $1.2 billion in 2017 for making illegal sales to Iran and North Korea.

The latest Commerce Department penalties require ZTE to pay an additional $1 billion fine, put in place a new management team and allow the United States to select a team of compliance officers.

Source:politico.com