Policy

China Trade Tariffs Stir Support, Fears and Retaliation Threat

‘China is not afraid of and will not recoil from a trade war’

Senate Minority Leader Charles Schumer, D-N.Y.(Tom Williams/CQ Roll Call file photos)

Lawmakers offered mixed reactions to the Trump administration’s decision Thursday to apply tariffs on nearly 1,300 products imported to the United States, a move Beijing responded to by announcing that it may increase tariffs on $3 billion of American goods.

China’s Commerce Ministry called on Washington to reach a negotiated settlement  “as soon as possible” but gave no deadline, The Associated Press and other news agencies reported. It said its tentative measurers were in response to the tariffs announced March 8 on steel and aluminum imports.

Earlier Thursday, lawmakers and industry groups had expressed fears that China would retaliate even though they shared President Donald Trump’s assessment that Beijing’s policies — such as forcing U.S. companies to share their technology with Chinese companies — needed to be curbed.

China had warned of what was coming.

“China is not afraid of and will not recoil from a trade war. If a trade war were initiated by the U.S., China would fight to the end to defend its own legitimate interests with all necessary measures,” the Chinese Embassy in Washington warned in a statement following the president’s order.  “The actions undertaken by the U.S. are self-defeating. They will directly harm the interests of U.S. consumers, companies, and financial markets,” the embassy said. “They also jeopardize international trade order and world economic stability.”

The Chinese Embassy said Beijing had tried to address Trump’s concerns about the U.S. trade deficit with China. In 2017, the goods and services deficit was $375 billon.

Senate Minority Leader Charles E. Schumer, long a China critic, had unusual praise for Trump’s executive memorandum. Trump said Thursday the tariffs on Chinese imports could reach $60 billion, although other administration officials said the tariffs would amount to $50 billion.

On the Senate floor Thursday, Schumer, D-N.Y., said China is a threat to U.S. innovation and progress. Sometimes he sounded like his fellow New Yorker Trump as he accused America’s top trading partner of taking advantage of U.S. companies.

“I don’t agree with President Trump on a whole lot, but today I want to give him a big pat on the back. He is doing the right thing when it comes to China,” Schumer said.

“I’ve called for such action for years and been disappointed by the inaction of both Presidents Bush and Obama,” Schumer said. “To achieve the kind of gains in advancements, in technologies, in biomedical science and in so many other things, they (the Chinese) have to steal what we do! Sometimes by buying our companies. Sometimes by cyber theft. Sometimes by these joint ventures, and they tell American firms you can only come to China if you give away your intellectual property.”

Concern tariffs could boomerang

There were no defenders of China on Capitol Hill, but members of the two congressional trade committees, Senate Finance and House Ways and Means, urged the Trump administration take a steady and studied approach in trying to punish China.

“President Trump is right to take a hard line against China’s dishonest trade practices, which have clearly harmed American workers,” said Ways and Means Chairman Kevin Brady, R-Texas. The trick, he said, is not to hurt U.S. companies, workers and families.

The U.S. Trade Representative’s Office must do a good job of structuring U.S. tariffs to make sure there is no collateral damage from them, Brady said. USTR has up to 15 days to seek public comment and decide on the list of proposed tariffs. Officials did not identify which Chinese products will be targeted.

“Tariffs are taxes, so the next 30 days of input are crucial to make sure we don’t punish American workers and families for China’s misbehavior,” Brady said in a statement.

Richard E. Neal, the top Ways and Means Committee Democrat, said Trump’s enforcement actions raise a number of questions.

“We know that the Administration is seriously considering imposing tariffs on imports from China and that the Treasury Department has been tasked with considering investment restrictions,” Neal, D-Mass.,  said in a statement. “We still don’t know what tariffs will be imposed or whether investment restrictions will be made. We also don’t know whether the actions, when the Administration finally decides on them, will be effective.”

Neal’s counterpart on the Senate Finance Committee, Ron Wyden, D-Ore., had harsh words for China and said he’d weigh in with ideas for effective enforcement on China.

“China has cheated, stolen and bullied American industry on trade for decades, causing massive economic wreckage to workers, employers and communities across America in the process,” Wyden said in a statement. He pledged to review USTR’s investigation report that Trump based his actions on.

“I intend to study the USTR report closely and look forward to close consultations on remedies to ensure the administration gets real results that actually bring back American jobs,.” Wyden said.

Agriculture industry braces

Industry groups said they’d welcome effective and narrowly focused remedies against China.

The U.S. Grains Council said its members know firsthand how China tries to limit U.S. imports of corn, soybeans, sorghum and distillers dried grains to protect its own producers and has fought those efforts through trade enforcement actions.

“We have supported targeted, U.S. government efforts to address these issues but nevertheless remained dedicated to the China market because it holds immense growth potential for U.S. agriculture,” President and CEO Tom Sleight said.

Sleight said his organization expects U.S. tariffs against China to “almost certainly prompt immediate and painful retaliation against U.S. agriculture and which have already complicated our global efforts to promote sales of U.S. grains and grain products.”

Robert D. Atkinson, president of the Information Technology and Innovation Foundation, welcomed the Trump administration’s decision to shed what he called the U.S. “rosy view that it was only a matter of time before China would open its markets and follow international trade rules.”

But Atkinson said the administration would be more likely to succeed if it joins forces with the European Union, Japan and South Korea to initiate an international crackdown on Beijing.

Otherwise, Atkinson said, “the U.S. risks winning only a Pyrrhic victory in a one-on-one trade war with China, because the Chinese government is in a much better political position to absorb economic pain — and it can dish out punishment with impunity to hurt the U.S. industries we should care about most.”

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