The End of Complacency

President Trump Readies Sweeping Tariffs and Investment Restrictions on China
By ANA SWANSON

A factory for the smartphone maker Oppo in Dongguan, China. The tariffs could extend to more mundane products, including consumer electronics, apparel and even shoes. 

WASHINGTON — The dust has yet to settle on President Trump’s decision to impose sweeping tariffs on steel and aluminum imports, but the White House is preparing another major trade measure, this time aimed squarely at China.
Mr. Trump and his top trade advisers are readying a raft of actions to penalize China’s theft of American intellectual property, including tariffs on at least $30 billion of annual Chinese imports, people familiar with the discussions said.
The measures, which could be announced as early as next week, may also include investment restrictions, caps on visas for Chinese researchers and challenges to China’s predatory trade practices at the World Trade Organization. 

Those familiar with the planning cautioned that the timing could be delayed, and that such measures are likely to be introduced in stages.
The rapid pace of White House trade measures is no accident and comes at the president’s request. 

At a White House meeting last week, Robert Lighthizer, the United States trade representative, presented Mr. Trump with a plan to target $30 billion a year in Chinese imports.
That amount is equal to the cost that Mr. Lighthizer’s office estimates Chinese policies aimed at acquiring American technology impose on American companies annually. 

In August, Mr. Lighthizer officially began an investigation into those practices, which include digital warfare as well as requiring companies to hand over trade secrets and form joint ventures with Chinese partners to gain access to certain markets.

Mr. Trump — surrounded by his commerce secretary, Wilbur Ross, his trade adviser Peter Navarro and others — asked for a figure beyond $30 billion and for the plan to be officially announced in the coming weeks, according to two people familiar with the exchange.
The administration is devising the measure to broadly counter a Chinese strategy known as the Made in China 2025 plan. 

China introduced a comprehensive initiative in 2015 to upgrade Chinese industry over the next decade and dominate sectors of the future, including advanced information technology, new energy vehicles and aerospace equipment.
Unlike the steel and aluminum measure, which divided the president’s advisers and his own party, the idea of targeting China has broad support among officials who believe China is cheating in global trade.
Gary D. Cohn, a top economic adviser who resigned over the steel and aluminum tariffs, had approved of action against China, the people familiar with the discussions said. 

Orrin G. Hatch, the chairman of the powerful Senate Finance Committee, and Senator Marco Rubio of Florida, Republicans who criticized those tariffs, have also endorsed a tough approach toward China.
Congress is also weighing legislation that would strengthen national security checks on Chinese investment. 

In a House hearing on Thursday, Heath P. Tarbert, an assistant secretary of the Treasury Department, said the current system for assessing investment is riddled with loopholes that allowed Chinese companies to evade such checks.
Concern over China’s practices picked up speed at the end of the Obama administration and has only increased since. 

Last year, a technology-focused unit in the Defense Department issued a report arguing that rising Chinese investment in Silicon Valley was giving China unprecedented access to the military technologies of the future, and increasing Chinese ownership of supply chains that service the United States military.
In recent months, China’s political apparatus has exerted even greater control over the nation’s economy. 

Business leaders and politicians of both parties now widely say that Washington’s past strategy of offering Beijing economic incentives to liberalize its market has failed. 

On Sunday, China officially ended term limits on the presidency, clearing the way for its dictator to stay in power indefinitely.
Administration officials say that past failure to rein in China warrants a much tougher approach. 

Mr. Trump took one step toward this in his national security strategy, which identified China as an economic aggressor. 

When a top Chinese economic envoy visited in late February, the administration asked China to shave $100 billion off its $375.2 billion trade surplus with the United States, two people close to the talks said. 

And while the steel and aluminum tariffs will hit many countries, they are primarily aimed at combating overcapacity in Chinese metals, including those that are routed through other nations.
The next step, advisers say, is to more aggressively focus on trade with China.
The United States is expected to impose tariffs on Chinese imports of high-technology goods specified in the Made in China 2025 plan, including semiconductors and new energy vehicles. 

But they could go beyond that to target more mundane products, including consumer electronics, apparel and even shoes. 

The breadth of the tariffs remains a contentious topic in the business sector and the White House, with some industries fretting about retaliation and increased costs to American companies and consumers.
Thomas J. Donohue, the president of the U.S. Chamber of Commerce, said on Wednesday that while the administration was right to focus on China’s unfair trade practices, his group strongly disagreed with sweeping tariffs.

Although there is wide support for taking action against unfair trade practices by China, business groups and economists still say the tariffs could easily provoke a backlash.

“They know our system inside out,” said Jim McGregor, the chairman of the greater China region for APCO Worldwide. 

He added, referring to the House speaker and the Senate majority leader: “They know what companies are important to Paul Ryan. They know what companies are important to Mitch McConnell. They know which trade associations and political groups have a big voice in Washington.”
Scott Kennedy, a China expert at the Center for Strategic and International Studies, said that while China deserved a tough response, he feared the consequences of the administration’s actions had not been well considered. 

“You really have to be smart,” he said. 

“The Chinese aren’t just going to fold over on this.”
Mr. Kennedy compared China to a bully that had stolen America’s lunch money. 

"You want to teach them a lesson,” he said. 

“But it’s not as simple as going up in the playground and punching them on the nose.”