President Trump declares war on China’s unfair trade practices with a series of tariffs.
Today, President Trump announced that tariffs will be implemented on China in retaliation for 15 years of alleged unfair trading practices by the People’s Republic of China.
According to a White House Senior Official, this is following a several-months-long investigation into China’s alleged violation of section 301 of the 1974 Trade Act, an act dating back to the Nixon Era. President Trump attempted to resolve this through dialogue with China until August of 2017. Upon failing to do so, this 301 investigation began.
It was also stated during a press conference call earlier today that China’s unfair trade practices are well documented and recognized across the world. These include theft of intellectual property, limits on the ability of foreign companies to compete in China (such as by requiring them to have no more than a 49% share in their own company), and pressure from the Chinese Government to surrender their technological knowledge. As some of this knowledge is used for military purposes also, there are national security concerns.
Free and Fair Trade
According to the Trump administration, the purpose of this action is not to give the US an unfair advantage, nor to discourage free trade. It is to specifically address China’s unfair trade practices.
White House Senior Official was asked if there was concern that these tariffs would merely result in companies in China moving their operations to places like Vietnam, rather than back to the US. The Official responded by explaining that the purpose of this is to focus on China’s unfair practices and that they have no objection to companies operating in other countries. The goal is to ensure that trade is fair and reciprocal, not to place a barrier on free trade.
The White House Official was also asked if there was a timeline for these tariffs, and if there were a set of goals or markers China should meet. The Official did not give a specific set of markers but did say that it is hoped that these tariffs will empower officials in China who are aware of and trying to remedy these unfair trade practices. The timeline, according to the official, is up to China. (Hence, China would need to convince the US that they have remedied these practices.)
When will the tariffs go into effect?
In the next 15 days, the USDR will publish a list of products that will be targeted for these tariffs. This list will heavily consist of technological items that are believed to be the result in part of Chinese intellectual theft. This publication will be available to the public for comment. The White House official wasn’t clear about how long that would be, but it was suggested by a member of the press that 30 days is standard.
Following public comments, they will be considered before implementation. If all goes according to plan, these tariffs will be implemented within two months.
The Effect on the American and Global Economy, according to the White House
The White House is relying on some studies that conclude that the US has lost about 1 million jobs to China due to the trade deficit, which was over $375 billion last year according to official figures from the US Census Bureau. On average, China exports to the US 4 times what the US exports to China.
The value of these tariffs is not determined yet, but are expected to be around $50 billion per year.
There is some concern that the US is acting unilaterally. It is. But as China’s unfair trade practices are well documented and accepted by most countries in the world, the White House believes that this action by the Trump administration will be seen as good for global trade. The goal is to pressure China to abide by its trade agreements, including the WTO, not to permanently stifle trade with China. The White House also plans to continue pursuing WTO litigation against China and to do so in cooperation with the EU, and other countries like Japan.
There are few other than Chinese Government official who deny these unfair trade practices, and there seems to be near universal consensus that something should be done. There is some dispute both at home and abroad whether these tariffs are the best way. In response to that, the White House points out that the US has been attempting to resolve this since the Bush era, and has been largely unsuccessful. This is why the more decisive action of imposing tariffs is believed to be necessary at this point.