Thursday, 24 January, 2019

WaPo: Trump prepared to hit China with $60B in annual tariffs

Chip Somodevilla  Getty Images Chip Somodevilla Getty Images
Melinda Barton | 20 March, 2018, 14:39

Trump argues that these products were developed using trade secrets from American companies that China either stole or forced them to give up in exchange for market access.

The situation remains fluid, and Trump has shown a tendency to back off economic threats at the last minute.

-China relations at the center of his presidential campaign, according to the administration officials, who spoke on the condition of anonymity to discuss the president's plans.

Many Republicans have also spoken out against the steel and aluminum tariffs, and GOP Sen.

The United States Chamber of Commerce and 44 other associations are urging President Donald J. Trump not to impose sweeping tariffs in response to China's trade practices, warning the action would "trigger a chain reaction of negative consequences for the USA economy". Matt Priest, president and CEO of the Footwear Distributors & Retailers of America (FDRA), said, adding that, "taxing our consumers and the companies that are providing them with innovative and affordable products should not be a remedy to address intellectual property concerns in China".

In a letter obtained Sunday by The Wall Street Journal, trade groups said the tariffs would cause "a chain reaction of negative consequences". But many disagree with the administration's strategy.

U.K. Trade Secretary Liam Fox said he urged US officials to reconsider imposing steel and aluminum tariffs on the European Union this week, suggesting the move has upset America's allies more than the main culprit for overcapacity, China. But he has also sought to leverage the tariffs to achieve other goals. The tariffs would also affect exports of electrical machinery from Texas, the state of Senate Majority Whip John Cornyn, as it exported to the European Union for $143 million. "That's a step forward for American workers".

The US trade deficit with China ran to a record $375 billion past year - but US exports to the country were also at a record.

"Adding even more tariffs on top of this heavy burden would mean higher costs for footwear consumers and fewer United States jobs", the letter stated.

The new tariffs follow Trump's recent announcement of a 25 per cent tariff on imported steel and 10 per cent tariff on imported aluminium.

The share of targeted products in the total exports of Hawaii, Michigan, Missouri, and ME is more than three times the US average.

"We still have great space and potential in opening-up", Li said. "Thirty percent are consumer electronics. And I want someone to bring me some tariffs".

It will be easier for China to hit back, Lardy said, as China can zero in on USA exports such as soybeans, which are entirely made in the United States.

According to data from the American Apparel & Footwear Association (AAFA), 41 percent of clothing, 72 percent of footwear and 84 percent of travel goods sold in the US are made in China.

The tariffs would also ripple through the US health care and education sectors, the trade groups said, because these industries rely on consumer electronics and imported goods and would face higher costs. "We'll just start buying things from the next lowest-cost supplier, such as Bangladesh or Vietnam".

For an already injured industry, more tariffs-and the retaliations that are sure to come with them-could pose sizable setbacks. "There may be some sort of implicit deal, given that Abe has been willing to do a lot of things to make Trump happy", said Goodman, who has also worked for the U.S. Treasury and the National Security Council.

They highlighted the potential impact, including higher prices for electronics, apparel and other products, and harming U.S. companies that sell component pieces of final products exported from China.

However, Canada and South Korea, both stanch allies of Washington and two of the biggest suppliers of steel to the US could also be affected; while Brazil and Mexico are the Latin American countries that are set to suffer the most damage.

Mr Trump signed a proclamation ordering the tariffs on March 8, invoking a seldom-used legal clause that gives him the authority to impose trade penalties to protect national security. German Economy Minister Peter Altmaier told reporters outside the White House that "Talks with United States officials could make it possible to find a solution that can still avoid a decline into a heavy trade conflict".

China, supposedly the source of Trump's concern, also has a few cards up its sleeve to offset USA markets, with Beijing stating that it will "take necessary measures to safeguard its legitimate rights and interests". "China urges the respect the authority of the multilateral trade system, and repeal the measures as soon as possible", it said. "Our tax rate for imported goods is at a medium level by worldwide standards". And Pennsylvania's exports of services jumped more than four-fold, more than five times the pace as its services exports to the rest of the world.

One of Trump's top advisers, Treasury Secretary Steven Mnuchin, is in Buenos Aires on Monday and Tuesday meeting with global finance ministers.

The letter is the latest example of the growing division between the Trump administration and many in the business community over trade policy.