The United States today announced a proposed list of products imported from China that could be subject to additional tariffs of 25 per cent amounting to USD 50 billion. The US Trade Representative (USTR) said the proposed list of products is based on extensive interagency economic analysis and would target products that benefit from China’s industrial plans while minimizing the impact on the US economy. Sectors subject to the proposed tariffs include industries such as aerospace, information and communication technology, robotics, and machinery. The list covers approximately 1,300 separate tariff lines and will undergo further review in a public notice and comment process, including a hearing. After completion of this process, the USTR will issue a final determination on the products subject to the additional duties. The total value of imports subject to the tariff increase is commensurate with an economic analysis of the harm caused by China’s unreasonable technology transfer policies to the US economy, the USTR said.
China had said yesterday that its door for talks with the Trump administration is open but if there is a trade war it will “fight till the end”. The comments came a day after Beijing imposed tariffs on 128 American products as a retaliation against US duties on steel and aluminium. China had imposed tariffs on 128 US imports worth USD 3 billion, including meat, fruit and pork, as retaliation against taxes approved by US President Donald Trump on imported steel and aluminium. Last month, Trump announced that the US will impose tariffs on approximately USD 50 billion worth of Chinese imports and take other actions in response to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises.
These policies bolster China’s stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans, such as “Made in China 2025”. Trump raked up the issue of trade gap with China once again, saying the US cannot afford to have a USD 500 billion a year trade deficit with Beijing. “We have a problem with China. They’ve created a trade deficit, and I really blame our representatives and, frankly, our preceding presidents for this. They have a trade deficit of USD 500 billion a year. It’s not something we can live with,” Trump told reporters during a media interaction with visiting Baltic leaders.
The theft of intellectual property alone, he said, is probably around USD 200-300 billion a year. “The US has to do something on trade with certain countries. And obviously, China is the leader in terms of deficits. We’ve never had a situation where a country — nor has there ever been in — in history, a situation where a country has done that to another country,” he said.
However several industry groups were quick to oppose Trump’s proposal to impose tariff on some 1300 selected Chinese products. “The Trump administration is right to push back against China’s abuse of economic and trade policy, but imposing tariffs on producer goods will inadvertently hurt Americans through reduced capital investment and lower productivity growth. “The list of tariffs that the USTR has proposed today would hurt companies in the US by raising the prices and reducing consumption of the capital equipment they rely on to produce their goods and services,” Information Technology and Innovation Foundation (ITIF) President Robert D Atkinson said.
Attempts to roll back Chinese innovation mercantilism should be more carefully targeted than this. The focus should be on things that will create the most leverage over China without raising prices and dampening investment in the kinds of machinery, equipment, and other technology that drives innovation and productivity across the economy, he said.
Myron Brilliant, executive vice president and head of International Affairs at the US Chamber of Commerce said the administration is rightly focused on restoring equity and fairness in US trade relationship with China. “However, imposing taxes on products used daily by American consumers and job creators is not the way to achieve those ends. The US Chamber looks forward to working with the administration throughout the comment period to make the business community’s voice heard on the US-China economic relationship,” he said.
But several US lawmakers supported Trump’s move. “Publishing this preliminary list is an important step that will allow US companies to evaluate the implications and convey their views about the effect of such tariffs on our economy. I’m confident that we can protect national security and minimize unfair trading practices while protecting American consumers and jobs,” House Ways and Means Chairman Kevin Brady said. “We must address China’s theft of technology and intellectual property belonging to American companies. It is a serious problem that requires action,” said Ways and Means Subcommittee on Trade Chairman Dave Reichert.