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President Trump Orders $50 Billion Tariffs On China

Pool, Getty Images
President Trump is announcing new tariffs against China on Thursday.

The Trump administration is preparing to impose some $50 billion worth of tariffs on Chinese imports, in a major escalation of the president's "America First" trade policy. President Trump is also calling for new limits on Chinese investment in U.S. technology, in an effort to protect what the administration calls America's "economic seed corn."

The tariffs are a response to longstanding complaints that China unfairly requires U.S. companies to share their technology as a cost of doing business in that country. The administration is also concerned that China is strategically acquiring innovative technologies through investments in the United States.

"Our view is that we have a very serious problem of losing our intellectual property, which is really the biggest single advantage of the American economy in my opinion," U.S. Trade Representative Robert Lighthizer said this week.

Aides described the $50 billion figure as a conservative estimate of what forced technology transfer and other moves by China cost the U.S. economy.

Trump is expected to sign a presidential memorandum Thursday directing his trade representative to draw up a long list of Chinese products to which the tariffs would be applied. The list will be made public in 15 days, and the tariffs would take effect after a period of public comment.

Business leaders acknowledged that China's treatment of intellectual property is a problem, but they warned that tariffs could backfire. Dozens of trade groups sent a letter to the president on Sunday urging Trump to pursue a different course.

"The imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the U.S. economy, provoking retaliation; stifling U.S. agriculture, goods and services exports; and raising costs for businesses and consumers," said the letter, signed by leaders of the U.S. Chamber of Commerce, the National Retail Federation and other groups.

Lighthizer acknowledged those concerns during testimony this week before the House Ways and Means Committee.

"Nobody wins from a trade war," he said. "We certainly don't want a trade war. On the other hand, you have to ask yourself, can we go on with a $800 — and growing — billion trade deficit. There's only a handful of countries in the whole world that have a GDP the size of that. So we have to do something."

The United States had a $337 billion trade deficit with China last year, 9 percent larger than the year before. When Trump talks about the trade gap, he often excludes services, where the U.S. has a surplus. The U.S. trade deficit with China in goods alone was $375 billion last year, an 8 percent increase from 2016.

The proposed tariffs on imports from China follow the administration's decision to impose tariffs on imported steel and aluminum. Those tariffs, which take effect on Friday, have already been watered down. Lighthizer said that in addition to Canada and Mexico, Australia, Argentina, Brazil, South Korea and the European Union will be exempted from the tariffs, at least temporarily.

Administration officials defended the crackdown on China, saying years of dialogue during the George W. Bush and Obama administrations had not produced the desired change. Dialogue continued during the opening months of the Trump administration, but the president has now decided tougher action is required.

The move could complicate Trump's effort to cultivate China's help in addressing North Korea's nuclear program.

Critics also warned that unilateral action by the United States squanders an opportunity to put international pressure on China for practices that are widely criticized by other countries.

"America first does not mean America alone," said Rep. Ron Kind, D-Wis. "By isolating us and by demonizing many of our friends and allies with a broad scope of retaliatory action I think makes our trade agenda that much more complicated."

But White House trade adviser Peter Navarro defended the president's move.

"This is a historic event," Navarro told reporters Thursday. "President Trump should be applauded for his courage and vision on this."
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