Trump orders curbs on Chinese goods, investments

The Hindu, March 22, 2018

The measures could target 1,300 products totalling tariffs up to $50 billion

President Donald Trump on Thursday directed imposition of tariffs on Chinese products, and restrictions on Chinese investments in America in a move that officials described as “historic” and is meant to push back against “economic aggression”.

A senior administration official said these measures mark a fundamental change in the current American approach towards Beijing that started with the Richard Nixon-Henry Kissinger era. That approach of trying to get China into the global market as a fair partner has failed, the official said.

He said previous Presidents George W. Bush and Barack Obama failed in their initiatives with China, and so did Mr. Trump’s early overtures towards China. “The President (Mr. Trump) tried to resolve these issues through dialogue but China has a different approach,” he said.

The measures follow the completion of a special assessment of Chinese trade and investment practices that give Chinese companies “unfair advantage” and “forced U.S. companies to transfer technologies”, a senior administration official said. The review under Section 301 of the Trade Act of 1974 was ordered by Mr. Trump last year.

Mitigating losses

The President has now directed the U.S Trade Representative (USTR) that conducted the review to design measures, including tariffs, to mitigate the losses being faced by American corporations on account of such “forced intellectual property acquisition”, according to the official.

Senior administration officials talking on background ahead of the President signing the directive said these measures were in line with the National Security Strategy announced last year that identified China as a “strategic competitor.” The measures that will come into effect within the next two months could target 1,300 different products totalling tariffs up to $50 billion.

Tariff wall

The President has asked the USTR to start the process towards erecting a tariff wall, while the Treasury Department has been directed to device restrictions on Chinese investments that officials said were taking over American technologies for military and strategic purposes. “These investments are not meant for earning the best returns on investments, but designed to serve China’s strategic and military objectives. We are moving to strategically defend America against this economic aggression,” the official said.

Presenting the hard measures that could trigger Chinese retaliation and potentially cause a trade war as essential to protect the interests of American workers, its corporations and the country’s strategic interests, the official said, the economic partnership with China over the last two decades has damaged America.

“It has benefited China more than us,” the official said, hoping that the Chinese response to these measures could account for that fact. He said while the Chinese economy has grown by 800% since its entry into the World Trade Organisation in 2001, the U.S. economy has slowed down. The official sought to directly correlate the “two million more jobs created in China” to “two million jobs lost in the U.S.” “We have got some cheap goods,” he said, adding that America declined meanwhile.

Tech super power

Pointing out that China’s declared objective is to establish itself as a technology superpower by 2025, the official said such a scenario will be harmful for the U.S.

“The Chinese have told the world in granular details that it would dominate the tech sector using tools of free market and the global trading system... American companies are in a dilemma. They get limited access to Chinese market and are forced to give up ownership of their technologies. Though they make money in the short run, they are diminishing in the long run,” the official said, adding that Mr. Trump is trying to help them.

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