The White House has escalated its aggressive actions on trade by proposing 25 percent tariffs on $50 billion in Chinese imports to protest Beijing’s policies requiring foreign companies to hand over technology.
China immediately said it would retaliate against the new tariffs, which target high-tech industries that Beijing has been nurturing, from advanced manufacturing and aerospace, to information technology and robotics.
The Office of the US Trade Representative issued a list targeting 1,300 Chinese products, including industrial robots and telecommunications equipment.
The suggested tariffs wouldn’t take effect right away: A public comment period will last until May 11, and a hearing on the tariffs is set for May 15. Companies and consumers will have the opportunity to lobby to have some products taken off the list or have others added.
The latest US move risks heightening trade tensions with China, which on Monday had slapped taxes on $3 billion in US products in response to earlier US tariffs on steel and aluminium imports.
“China’s going to be compelled to lash back,” warned Philip Levy, a senior fellow at the Chicago Council on Global Affairs and an economic adviser to President George W Bush.
Early on Wednesday in Beijing, China’s Commerce Ministry said it “strongly condemns and firmly opposes” the proposed US tariffs and warned of retaliatory action.
“We will prepare equal measures for US products with the same scale” according to regulations in Chinese trade law, a ministry spokesman said in comments carried by the official Xinhua News Agency.
The US sanctions are intended to punish China for deploying strong-arm tactics in its drive to become a global technology power. These include pressuring American companies to share technology to gain access to the Chinese market, forcing US firms to license their technology in China on unfavourable terms and even hacking into US companies’ computers to steal trade secrets.
In September 2015, the two countries signed an agreement ostensibly to prevent economic espionage from being conducted online, which was subsequently claimed to be breached the very next day.
Kathy Bostjancic of Oxford Economics predicted the tariffs “would have just a marginal impact on the US economy” — unless they spark “a tit-for-tat retaliation that results in a broad-based global trade war”.
Representatives of American business, which have complained for years that China has pilfered US technology and discriminated against US companies, were nevertheless critical of the administration’s latest action.
“Unilateral tariffs may do more harm than good and do little to address the problems in China’s (intellectual property) and tech transfer policies,” said John Frisbie, president of the US-China Business Council.
Closing out the GPU Technology Conference in San Jose last week, Nvidia CEO and founder Jensen Huang said “there cannot be a [trade] war”.
“It is definitely better, it is actually vitally important, that the world continues to have a collaborative trading and open business relationship,” Huang said.
“We sell to China, we have partners in China, China’s ecosystem and economy depends on our technology, we have a lot of great employees in China that contribute to the creation of products [in the US], and I use China, but it’s true with India, it’s true with the United Kingdom — it’s true everywhere — so the question is for companies that are global, how should we think through that and I think the answer is the best way is to work with our nations to figure out a way to collaborate.”
When announcing the process of introducing tariffs last month, United States Trade Representative Robert Lighthizer said the US has 44 million workers involved in “high-technology areas” and that technology would be the “the backbone of the future” for the American economy.
“We have a trade deficit, depending on the way you calculate, of $504 billion, now some people would say it is really $375 billion,” US President Donald Trump said at the time. “Many different ways of looking at it, but any way you look at it, it is the largest deficit of any country in the history of our world — it’s out of control.”
“We are doing things for this country that should have been done for many, many years — we’ve had this abuse by many other countries and groups of countries that were put together in order to take advantage of the United States, and we don’t want that to happen, we’re not going to let that happen.”
In February, the heads of the CIA, FBI, NSA, and the director of national intelligence to the Senate Intelligence Committee recommended that Americans not use products from Huawei and ZTE.
Last month, Trump issued an order sinking Broadcom’s proposed takeover of Qualcomm, saying there was “credible evidence” the deal would hurt the national security of the United States.
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