President Trump took the first steps toward imposing tariffs on $60 billion in Chinese goods and limiting China’s ability to invest in the U.S. technology industry Thursday, saying the moves were a response to Beijing’s history of forcing U.S. companies to surrender their trade secrets to do business in China.
The president directed U.S. Trade Representative Robert E. Lighthizer to announce within 15 days a proposed list of products to be hit with tariff increases. After a public comment period, the final list, designed to target Chinese products that benefited from improper access to U.S. technology, will be made public.
“We’re doing things for this country that should have been done for many, many years,” the president said before signing a memorandum setting in motion the trade actions.
The president blamed China for the loss of 60,000 factories and 6 million jobs, a number that most economists say blends the impact on U.S. employment of both Chinese competition and automation.
Trump said that unfair Chinese trade practices are responsible for the yawning U.S. trade deficit with China, which has reached a record $375 billion on his watch.
“Anyway you look at it, it’s the largest of any country in the history of our world,” the president said. “It’s out of control.”
The White House expects the new taxes, which could reach up to 1,300 specific imports, will have a “minimal impact” upon consumers. But markets were down sharply Thursday morning in anticipation of the move and many business groups voiced opposition.
“There is no way to impose $50 billion in tariffs on Chinese imports without it having a negative impact on American consumers. Make no mistake, these tariffs may be aimed at China, but the bill will be charged to American consumers who will pay more at the checkout for the items they shop for every day,” said Hun Quach, vice president for international trade at the retail Industry Leaders Association.
Trump and his aides provided varying estimates of the value of the Chinese goods at issue. The president referred in his Roosevelt Room remarks to “about $60 billion” while a senior White House aide who briefed reporters two hours before the president spoke put the figure at “about $50 billion.”
The official can not be identified under the ground rules for such White House briefings.
Trump also ordered Lighthizer to complain to the World Trade Organization about China’s discriminatory licensing practices for foreign companies, an effort U.S. officials hope will draw support from U.S. allies in Europe and Japan.
On Capitol Hill Thursday, Lighthizer indicated that several U.S. allies would be spared unrelated tariffs on imported steel and aluminum — at least temporarily — while they negotiate possible permanent exemptions.
As he had said on Wednesday, Lighthizer told the Senate Finance Committee that the European Union, Argentina, Australia, Brazil and South Korea will not be hit by the tariffs, which take effect at 12:01 a.m. Friday. Trump already had exempted Canada and Mexico from the import levies for the duration of talks aimed at renegotiating the North American Free Trade Agreement.
The president described the actions against China as part of a broader reappraisal of U.S. global relationships, featuring a willingness to use tariff threats to force concessions from U.S. trading partners.
“We will end up negotiating these things rather than fighting over them,” Commerce Secretary Wilbur Ross said, in an apparent reference to fears of a trade war.
The president also alluded to political calculations, saying that voter concerns over economic losses from bad trade deals was “maybe one of the main reasons” he won the White House.
“The era of economic surrender is over,” added Vice President Michael Pence.
But the trade moves drew fire from the conservative National Taxpayers Union’s Bryan Riley, who called the proposed China tariffs “self-destructive and reckless.”
Under the measures targeting Beijing announced Thursday, Treasury Secretary Steven Mnuchin will draw up new investment restrictions to address concerns about Chinese investors, including state-sponsored investment funds, acquiring American companies to gain access to their technology.
“The end objective of this is to get China to modify its unfair trading practices,” said Everett Eissenstat, deputy assistant to the president for international economic affairs.
Since taking office 14 months ago, the president’s remarks on China have swung between effusive praise for Chinese President Xi Jinping and tough talk about its trade practices. In recent months, Trump has adopted an increasingly bellicose tone, with the White House billing Thursday’s action as “targeting China’s economic aggression” and the president’s trade agenda released in February labeling the country a “hostile” economic power.
“China is engaged in practices which harm this country,” said Peter Navarro, director of the White House office of Trade and Manufacturing Policy.
Trump’s trade moves potentially mark a sharp break with decades of growing U.S. economic engagement with China, which began in the late 1970s as the country emerged from Maoist autarky.
Years of commercial delegations and diplomatic dialogue saw trade between the two countries mushroom to $635 billion from $116 billion in 2000. Yet at the same time, U.S. companies complained about strict restraints on their operations in the Chinese market. Government regulations typically limited them to a minority stake alongside a local partner.
Both the Bush and Obama administrations sought to persuade the Chinese to embrace more fully a market-oriented policy. Through 2013, when a high-level Communist Party conclave proclaimed a “decisive role” for the market and officials promised to pare back the state’s role in the economy, U.S. officials believed China was headed in the right direction.
“That process has failed,” said Navarro.
Trump administration officials now say that China’s economic policies are distorting global markets for key products such as steel. and threaten to have the same effect on more advanced industries like semiconductors and artificial intelligence.
Washington’s long-standing belief that increased economic ties between the world’s two largest economies would benefit both the Chinese and American peoples have been scrapped by the Trump team. “China benefits far more from the U.S.-China relationship than the U.S. does,” Navarro said.