President Donald Trump intends to slap new tariffs and other penalties on Chinese goods in response to what U.S. officials contend is Beijing’s practice of stealing technology and companies’ information.
Senior White House officials described Trump as giving Chinese leaders months to alter its practices, only to conclude they have no intention of doing so. Officials said the George W. Bush and Barack Obama administrations “worked very hard” to improve trade relations with Beijing, but ultimately had only “failed dialogues” to show for those efforts.
“President Trump did his due diligence in inviting the Chinese to the Mar-a-Lago process and engaged,” one of the senior officials said Thursday morning. “We went all the way until August in trying to resolve these through dialogue. … The problem is with the Chinese, talk is not cheap. It’s been very expensive. … The president decided we needed to move forward.”
U.S. and global markets were down ahead of Trump setting the tariffs process in motion.
The administration is eager to use the coming penalties to try to force Chinese officials to cease alleged actions including acquiring all or shares of U.S. firms to obtain data about American technologies they then hand to Chinese firms that dominate the markets there that depend on those stolen technologies. The penalties will also target China’s alleged habit of crafting licensing terms for specific products to favor domestic firms over American companies.
The coming tariffs and penalties, which could total $50 billion, could cool Trump’s relationship with Chinese President Xi Jinping. He has lavished the Chinese president with praise, even breaking with U.S. tradition by endorsing Xi’s aggressive move to become, as Trump put it “president for life.”
The action the White House announced Thursday, once implemented, would be Trump’s harshest move yet against the Asian giant after his 2016 presidential campaign featured daily attacks on China’s trade tactics and bold promises to alter Beijing’s behavior. But just how far the action might go will not be decided for months.
That’s because the White House officials who briefed reporters Thursday morning described the documents Trump will sign around midday as only starting a bureaucratic process to identify Chinese goods that might be slapped with import penalties. That process will take weeks, and then the actual tariffs would have to be crafted.
When pressed, the senior officials assured reporters actual tariffs are coming, saying they are required to take the next bureaucratic steps. Trump has directed them to, at the end of the process, penalize the Chinese. The $50 billion figure was selected because officials determined that would offset gains China has made via its trade tactics.
“If China dominates the technologies of the future, it will be very hard for the United States to have an economy of the future,” the official said. “What the United States is doing is defending itself against … economic aggression.”
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“Our relationship with China has been a very good one, and we look forward to seeing what ideas they come back with. We must act soon!” Trump tweeted March 7. Trump wrote that day that he thinks highly of Xi, but contended he has privately pressed his counterpart on a need for the Asian power to alter its trade practices.
China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States. Our relationship with China has been a very good one, and we look forward to seeing what ideas they come back with. We must act soon!— Donald J. Trump (@realDonaldTrump) March 7, 2018
Trump’s coming action against China follows his decision last month to slap tariffs on aluminum and steel imported from all other countries. That move, which angered and frustrated Republican lawmakers who warned of a trade war, was largely aimed at China.
The senior White House official said the Trump team expects this action to be a “unifying” one among Republicans and Democrats.
Some of Trump’s fellow Republicans urged him to instead take an action within his legal authorities aimed directly at Beijing’s trade practices, which a list of U.S. administrations have questioned.
In true Trump fashion, he decided to do both.
For instance, Senate Finance Chairman Orrin G. Hatch delivered a blistering critique Tuesday of the president’s trade policy, urging the White House to focus on actions to level trade imbalances with countries like China and groups like the European Union. China has a $375 billion trade surplus with the United States.
The Utah Republican told an audience at a Business Roundtable event that “external opponents and internal skeptics” threaten the U.S. economy — a veiled warning about other global actors and the Trump team’s brand of mercantilism, an economic philosophy that had been pushed out of American politics in the post-great wars era.
Yet Hatch and other congressional Republicans ultimately backed down in their brief feud with Trump over his steel and aluminum tariffs. GOP leaders have said they have no plans to move legislation that would lessen their impact or roll them back, handing Trump what he perceives as a big win.
“I have been in the Senate for 42 years, and this is one of the most challenging environments for U.S. trade that I’ve seen,” Hatch said. “When it comes to trade policy, we’re all seeing the dangerous pitfalls that are currently in our path. They threaten to undermine and undo our recent success. Fortunately, in my view, those pitfalls are avoidable.”
Hatch took aim at China: “Their government and state-owned enterprises have condoned and participated directly in the theft of trade secrets and the violation of intellectual property rights.”
The Xi administration fired back Thursday ahead of Trump’s announcement.
“How many soybeans should China buy that are equal to one Boeing aircraft?” Chinese Foreign Ministry spokeswoman Hua Chunying said, according to wire reports. “Or, if China buys a certain number of Boeing aircraft should the U.S. buy an equal number of C919s?”