President
Trump's decision to order some $50 billion in tariffs on a wide range
of Chinese imports, despite the risk of setting off a wider trade war,
met with bipartisan approval Thursday, reflecting the growing
disillusionment with Beijing on the part of many American officials and
business leaders.
The
order was the largest move yet in Trump's rapidly unfolding effort to
use tariffs — taxes on imported goods — to counter what he sees as
unfair trade practices by other countries. It aimed to stop what U.S.
officials describe as a years-long effort by China to steal American
technology.
The
move came on the same day that administration officials announced a
significant scaling back of another major trade initiative — Trump's
announcement two weeks ago of tariffs against imported steel and
aluminum. Officials announced that countries responsible for more than
half of U.S. steel imports and a similar share of aluminum would be
exempted, more tightly focusing that weapon on China as well.
By late in Thursday's trading session in New York, market indexes were down by nearly 3%, largely on fears of a brewing trade war.
The
new tariffs are designed to raise prices on Chinese products from
clothing to laptop computers to toys. Officials who briefed reporters in
advance said the list of more than 1,000 products subject to the new
tariffs will be made final after a period for public comment, probably
later this spring.
Trump
also will direct the Treasury Department to come up with new
restrictions on Chinese investment in the U.S., beyond the rules that
currently limit foreign purchases of U.S. companies and assets.
White
House trade advisor Peter Navarro, a longtime critic of Chinese
practices, called Trump's move a "historic event" that is part of a
"seismic shift" by the administration away from decades of U.S. policies
that sought to draw China further into the international economic
order.
China
seeks "domination of the industries of the future" and has used
"discriminatory, unreasonable practices" to force U.S. companies to help
it achieve that goal, Navarro told reporters in advance of Trump's
announcement.
The
U.S. has "repeatedly aired its concerns" about those practices, but
"those dialogues failed under the Bush and Obama administrations," he
said. Faced with a pattern of Chinese actions that he estimated had cost
the U.S. at least 2 million jobs, Trump decided to act, Navarro said.
Although
Trump's statement, emphasizing negotiations, held out the possibility
of resolving trade disputes with China, Beijing already has plans to
retaliate and almost certainly will do so. U.S. agricultural exports,
notably soybeans and hogs, are likely to be early targets, raising
worries among Trump supporters in farm states of the Midwest and Great
Plains.
China
could also hit major U.S. companies such as Apple, Ford and Boeing.
China plans to buy about $1 trillion of Boeing's aircraft over the next
two decades, the company has said.
A
fight with China over trade could also complicate Trump's negotiations
with North Korea over its nuclear program, a subject on which he wants
Beijing's help.
Hua
Chunying, a Chinese Foreign Ministry spokeswoman, emphasized Wednesday
that both the U.S. and China have benefited from economic ties,
particularly American consumers. China does not want a trade war, she
told reporters, "but if our hands are forced, we will not ... recoil
from it. … [W]e will definitely take firm and necessary countermeasures
to safeguard our legitimate interests."
Later
Thursday, the country's Commerce Ministry threatened to impose $3
billion in reciprocal measures, including a 25% tariff on U.S. pork
imports and 15% tariffs on American steel pipes, fruit and wine,
according to Bloomberg.
China "has launched a multifaceted effort to prepare for what looks like an imminent trade war," the state-run Global Times tabloid said on Wednesday,
adding that Chinese officials have been meeting with foreign
governments "in a bid to form a multilateral response" to the tariffs.
The
timing of Trump's move in part marks a calculation that with the U.S.
economy at its healthiest point in a decade, the country is in good
position to handle whatever disruptions a potential trade war with China
might bring.
It
also reflects the rising influence in the administration of trade
hawks, notably Navarro. Supporters of free trade have been in retreat
within the administration after Gary Cohn resigned from his post as
Trump's chief economic adviser after losing an internal battle over the
tariff policy.
The
open confrontation between the U.S. and China shows the effect of
Trump's trademark bluster and his scorn for the caution of his
predecessors.
But
the shift to a more aggressive policy also reflects growing
disenchantment with China among U.S. policymakers of both parties as
well as influential business leaders.
Senate
Democratic Leader Charles E. Schumer of New York, for example, praised
the president Thursday morning in a Senate floor speech.
"Today
he is doing the right thing," Schumer said, accusing China of
"rapaciously" taking advantage of the United States. "They steal it," he
said, referring to U.S. intellectual property, "and we do nothing."
A leading Republican, House Ways and Means Committee chair Kevin Brady of Texas, offered more nuanced praise.
"President
Trump is right to take a hard line against China's dishonest trade
practices, which have clearly harmed American workers," Brady said in a
statement. "The challenge for every president, however, is how to punish
China without harming our families, businesses, and farmers. 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."
Pressure
from Brady and other Republican congressional leaders, business groups
and U.S. allies helped cause the administration to scale back the
tariffs on imported metals that Trump had announced.
On
Thursday, U.S. Trade Representative Robert Lighthizer told Congress
that the European Union members, as well as Argentina, Australia, Brazil
and South Korea would be exempt from the metals tariffs. Trump had
previously announced that Canada and Mexico would be exempted. In
addition, the administration plans to grant exemptions for some
industries that buy types of steel that aren't produced domestically.
Action
against China has more political support because of a long history of
disappointments. When China fully entered the international trading
system, becoming a member of the World Trade Organization at the end of
2001, leaders in both parties predicted that joining would mark the
first step on a path that would lead China to greater wealth, but also
make it less threatening to the rest of the world.
After
Congress approved legislation in 2000 clearing the way for China's
entry into the WTO, then-President Clinton hailed the vote as an
"historic step toward continued prosperity in America, reform in China
and peace in the world."
The
man who would succeed him in the Oval Office, then-Gov. George W. Bush
of Texas, called the move a step toward a "stronger American economy, as
well as more opportunity for liberty and freedom in China.''
Eighteen years later, that bright promise has faded.
China has benefited hugely — its national income per capita has grown ninefold since 2000, according to the World Bank.
But
that growth came at a much higher cost to U.S. jobs than backers of
trade liberalization had predicted. Moreover, the bold predictions of
"reform" and "liberty" in China have largely proved wrong.
U.S.
politicians of both parties have grown increasingly worried about
Chinese efforts to get hold of American technology — by forcing U.S.
companies to share innovations as a price of doing business in China or,
in many cases, by industrial espionage, cyberattacks and other crimes.
So too have many business leaders.
"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," the National Assn. of
Manufacturers said in a statement.
But,
the group warned, tariffs "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."
The
U.S.-China Business Council, which represents American companies that
do business in China, similarly said in a statement that "China's
technology transfer practices and protection of intellectual property
need to be addressed and improved." But the group's president, John
Frisbie, added that "American business wants to see solutions to these
problems, not just sanctions such as unilateral tariffs that may do more
harm than good."
Last
summer, the Trump administration began an investigation of China's
actions, known as a Section 301 inquiry for the U.S. trade law that
gives the president power to retaliate against certain unfair trade
practices.
The
"very extensive" investigation found strong evidence that China has
violated its trade agreements and engaged in a pattern of unfair trade
practices, Everett Eissenstat, the deputy director of the White House's
National Economic Council, told reporters.
The
investigation found that the Chinese government has hacked U.S.
computer systems to benefit Chinese companies, routinely pressured U.S.
companies to enter into joint ventures with Chinese partners that
required sharing valuable technology, and used state funds to purchase
U.S. companies to get their patents and other intellectual property.
In
addition, U.S. companies don't have the same ability to license
intellectual property in China that Chinese companies have, he said.
The record "clearly demonstrates that there are unfair practices by China," Eissenstat said.
But
administration critics say Trump's "America first" rhetoric and his
flouting of long-standing U.S. policies in other areas have hurt the
international alliances that might have helped the U.S. in a fight with
China.
Moreover,
the new tariffs do come with some domestic political risk for the
president, and China will probably use its retaliatory actions to target
those pressure points.
Already
on Wednesday, in advance of Trump's decision, members of Congress were
expressing concerns about the impact on their home state industries.
When
Lighthizer appeared before the House Ways and Means Committee,
Republicans from Ohio, Nebraska and Kansas hit him with questions about
possible Chinese efforts to restrict U.S. exports of soybeans, hogs and
other agricultural products.
Chinese
officials already have suggested that they can buy less of those
commodities from the U.S. and more from other suppliers, such as Brazil.
Others
raised questions about the effect on retailers or on low-income
families if the prices of imported Chinese shoes and clothing go up.
Lighthizer
conceded that retaliation was likely, but insisted that the concerns
were not "a sufficient worry that you're going to say, therefore, we're
not going to stick up for U.S. intellectual property."
"We can't have a $375-billion trade deficit and not do anything to defend ourselves," he said.
Lauter reported from Washington and Kaiman from Beijing.
