This week, as part of the “U.S. response to China’s unfair trade practices related to the forced transfer of U.S. technology and intellectual property,” the Office of the U.S. Trade Representative published a proposed list of products imported from China that could be subject to additional tariffs. China has countered with a list of its own.
Following USTR’s investigation under Section 301 of the Trade Act of 1974, President Trump announced in March that the United States will impose tariffs on approximately $50 billion worth of Chinese imports and take other actions in response to China’s policies that his administration says, “coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises.” These policies, White House officials say, “bolster China’s stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans, such as ‘Made in China 2025.’”
The proposed list of products is based “on extensive interagency economic analysis” and would target products that benefit from China’s industrial plans while “minimizing the impact on the U.S. economy.” Sectors subject to the proposed tariffs include industries such as aerospace, information and communication technology, robotics, and machinery.
The proposed list covers approximately 1,300 separate tariff lines and will undergo further review in a public notice and comment process, including a hearing. After completion of this process, USTR will issue a final determination on the products subject to the additional duties.
The total value of imports subject to the tariff increase is commensurate with an economic analysis of the harm caused by China’s unreasonable technology transfer policies to the U.S. economy, as covered by USTR’s Section 301 investigation.
The announcement comes just days after the USTR filed a request for consultations with China at the World Trade Organization to address China’s discriminatory technology licensing requirements. Such consultations are the first step in the WTO dispute settlement process. If the United States and China are unable to reach a solution through consultations, the U.S. may request the establishment of a WTO dispute settlement panel to review the matter.
The full list of products and intended tariff increases can be found online. Among them are exports of aeronautical equipment, pharmaceuticals, and medical devices. Even lithium batteries, used in many consumer electronics, are targeted.
For his part, in a Twitter tweet, President Trump was steadfast
“We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.,” he wrote. “Now we have a trade deficit of $500 billion a year, with intellectual property theft of another $300 Billion. We cannot let this continue!”
In response to the announcement, the Chinese Ministry of Commerce announced on April 4 that it will impose a 25 percent tariff on 106 products, an estimated $50 billion in U.S. exports. On their list are agricultural products, including wheat, corn, beef, cotton, and tobacco.
A target date for China’s new tariffs has not yet been announced.
Many business groups have expressed consternation about the prospect of an international trade war.
Jay Timmons, president and CEO of the National Association of Manufacturers, has renewed his call for an approach that includes a rules-based bilateral trade agreement with China. In January, Timmons sent a letter to President Donald Trump urging him to pursue a trade agreement with China to wholly restructure our economic relationship.
“Manufacturers agree with President Trump that China’s theft of American intellectual property and their use of unfair trade practices represent clear threats to manufacturers’ competitiveness and the jobs of American manufacturing workers,” Timmons said in a statement. “Tariffs are one proposed response, but they are likely to create new challenges in the form of significant added costs for manufacturers and American consumers. In addition to these challenges, tariffs also run the risk of provoking China to take further destructive actions against American manufacturing workers.”
“If the imposition of tariffs is the first bid in negotiating a more level playing field, manufacturers believe the end product must be a new, strategic approach that includes negotiating a fair, binding and enforceable rules-based trade agreement with China that requires them to end their unfair trade practices once and for all,” he added.