US tariff list aims at technology China wants to dominate

The Trump administration on Tuesday raised the stakes in a growing trade showdown with China, announcing 25 per cent tariffs on some 1,300 industrial technology, transport and medical products.
The US is targeting 1,300 product lines to try and force China to change its intellectual property practices, the US Trade Representative's office said.
The US is targeting 1,300 product lines to try and force China to change its intellectual property practices, the US Trade Representative's office said.PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - The US proposed imposing 25 per cent tariffs on about US$50 billion worth of Chinese-made products, focusing on high-tech items from semiconductors to lithium batteries while seeking to minimise the impact on American consumers.

"This level is appropriate both in light of the estimated harm to the US economy, and to obtain elimination of China's harmful acts, policies, and practices," the US Trade Representative's office said in a report on Tuesday.

The US is targeting the 1,300 product lines to try and force China to change its intellectual property practices, the office said.

In deciding which products to hit, US officials identified items that "benefit from Chinese industrial policies, including Made in China 2025," USTR said, referring to Beijing's plan to dominate key strategic technologies.

The US also picked products based on the principle of trying to minimise the effect on the US economy and consumers, the office said.

In addition to advanced technologies such as communication satellites, the list includes products ranging from various types of steel to television components, medical devices, dishwashers, snow blowers and flame throwers. The proposed tariffs cover a number of sectors, from health care to aviation and auto parts.

China's embassy to the US said in a statement released late Tuesday that it "strongly condemns and firmly opposes" the tariffs.

"As the Chinese saying goes, it is only polite to reciprocate," the embassy said, adding that China would take "corresponding measures of equal scale and strength against US products."

 

Strong Response

The US duties will likely provoke a strong response from China, said Carlos Gutierrez, US commerce secretary under former President George W. Bush.

"Wars start with battles, and the battles have started," Gutierrez, co-chair of the consulting firm Albright Stonebridge Group, said in an interview in Mexico City.

Chinese President Xi Jinping "can't afford to look like he's getting pushed around".

The US list appears to be more "bellicose" than the range of tariffs China announced on Monday in response to separate American duties on steel and aluminium imports, said Mark Muro, senior fellow at the Brookings Institution.

They included tariffs of as high as 25 per cent on more than 120 items such as US-supplied pork and sparkling wine.

The US tariff recommendations put a "strong focus on industrial inputs. Many of these items are inputs into the entire factory process that could well affect prices or create disruption as these tariffs flow through the whole system," Muro said.

Public Comments

The release of the list by US Trade Representative Robert Lighthizer leads into a roughly 60-day period when the public can provide feedback and the government holds hearings on the tariffs.

Some business groups immediately denounced the proposed tariffs.

"The administration is rightly focused on restoring equity and fairness in our trade relationship with China. However, imposing taxes on products used daily by American consumers and job creators is not the way to achieve those ends," said Myron Brilliant, head of international affairs at the US Chamber of Commerce.

An organisation representing US technology companies including Amazon.com Inc. and Intel Corp. urged the Trump administration to work with other countries to "address systemic issues with China."

"If history is any indication, these proposed tariffs will not work and will be entirely counterproductive," said Dean Garfield, chief executive officer of the Information Technology Industry Council.

"Tariffs penalise US consumers by increasing prices on technology products and will not change China's behaviour."

Shoes, Clothing

The National Retail Foundation said it was pleased products such as shoes and clothing were excluded, but it expressed concern at proposed duties on consumer electronics and household appliances.

However, a group representing manufacturers and steelworkers applauded the move. "The administration's proposed actions will help restore some balance with China, as well as recreate an environment where some of the millions of jobs we've lost to China will have a chance of being restored," said Scott Paul, president of the Alliance for American Manufacturing.

Penalising Beijing

Trump said on March 22 the tariffs were aimed at penalising Beijing for what the US alleges to be theft of American companies intellectual property.

The president's recent trade actions, which also include duties on steel and aluminium, have provoked concerns of a global trade war.

China imposed tariffs of its own in response to Trump's actions on metal imports, and has threatened additional retaliation if he erects further trade barriers.

China's Made in China 2025 plan was announced in 2015, and highlighted 10 sectors for support on the way to China becoming an advanced manufacturing power, from information technology, to robotics and aerospace.

In addition, China has a separate development strategy for artificial intelligence, published in 2017.

USTR said the public can submit written comments on the tariffs until May 11, and it will hold a public hearing on the proposed tariffs on May 15 in Washington.