Trump eyes tariffs on Chinese imports

Aim is to penalise intellectual property theft; investment curbs, visa caps also being planned

WASHINGTON • The dust has yet to settle on President Donald Trump's decision to impose sweeping tariffs on steel and aluminium imports, but the White House is preparing another major trade measure, this time aimed squarely at China.

Mr Trump and his top trade advisers are readying a raft of actions to penalise China's theft of US intellectual property, including tariffs on at least US$30 billion (S$39 billion) of annual Chinese imports, people familiar with the discussions said.

The measures, which could be announced as early as next week, may also include investment restrictions, caps on visas for Chinese researchers and challenges to China's trade practices at the World Trade Organisation. Those familiar with the planning cautioned that the timing could be delayed, and that such measures are likely to be introduced in stages.

The rapid pace of White House trade measures is no accident and comes at the President's request.

At a White House meeting last week, US trade representative Robert Lighthizer presented Mr Trump with a plan to target US$30 billion a year in Chinese imports.

That amount is equal to the cost that Mr Lighthizer's office estimates Chinese policies aimed at acquiring US technology impose on US companies annually. In August, Mr Lighthizer officially began an investigation into those practices, which include digital warfare as well as requiring companies to hand over trade secrets and form joint ventures with Chinese partners to gain access to certain markets.

Mr Trump - surrounded by Commerce Secretary Wilbur Ross, his trade adviser Peter Navarro and others - asked for a figure beyond US$30 billion and for the plan to be officially announced in the coming weeks, according to two people familiar with the exchange.

The administration is devising the measure to broadly counter a Chinese strategy known as the Made-in-China 2025 plan.

Unlike the steel and aluminium measure, which divided the President's advisers and his own party, the idea of targeting China has broad support among a number of officials who believe China is cheating in global trade.

China introduced a comprehensive initiative in 2015 to upgrade Chinese industry over the next decade and dominate sectors of the future, including advanced information technology, new energy vehicles and aerospace equipment.

Unlike the steel and aluminium measure, which divided the President's advisers and his own party, the idea of targeting China has broad support among a number of officials who believe China is cheating in global trade.

Mr Trump identified China as an economic aggressor in his national security strategy. When a top Chinese economic envoy visited in late February, the administration asked China to shave US$100 billion off its US$375.2 billion trade surplus with the US, two people close to the talks said. And while the steel and aluminium tariffs will hit many countries, they are aimed primarily at combating overcapacity in Chinese metals, including those that are routed through other nations.

The next step, advisers say, is to more aggressively focus on trade with China.

Although there is wide support for taking action against unfair trade practices by China, business groups and economists still say the measure could be risky. The US and China maintain the world's largest trading relationship, and the tariffs could easily provoke a backlash.

"They know our system inside out," said Mr Jim McGregor, chairman of the greater China region for APCO Worldwide. He added, referring to the House Speaker and the Senate majority leader: "They know what companies are important to Paul Ryan. They know what companies are important to Mitch McConnell. They know which trade associations and political groups have a big voice in Washington."

Mr Scott Kennedy, a China expert at the Centre for Strategic and International Studies, said that while China deserved a tough response, he feared the consequences of the administration's actions had not been well considered.

"You really have to be smart," he said. "The Chinese aren't just going to fold over on this."

He compared China to a bully that had stolen America's lunch money. "You want to teach them a lesson. But it's not as simple as going up in the playground and punching them on the nose."


A version of this article appeared in the print edition of The Straits Times on March 17, 2018, with the headline 'Trump eyes tariffs on Chinese imports'. Subscribe