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.”

President Trump eyes tariffs on up to $60 billion Chinese goods; tech, telecoms, apparel targeted

By David Lawder, Michael Martina

U.S. President Donald Trump speaks at Marine Corps Air Station Miramar in San Diego, California, U.S. March 13, 2018. 

WASHINGTON/BEIJING -- U.S. President Donald Trump is seeking to impose tariffs on up to $60 billion of Chinese imports and will target the technology and telecommunications sectors, two people who had discussed the issue with the Trump administration said on Tuesday.
A third source who had direct knowledge of the administration’s thinking said the tariffs, associated with a “Section 301” intellectual property investigation, under the 1974 U.S. Trade Act begun in August last year, could come “in the very near future.”
While the tariffs would be chiefly targeted at information technology, consumer electronics and telecoms, they could be much broader and the list could eventually run to 100 products, this person said.
The White House declined to comment on the size or timing of any move.
Trump is targeting Chinese high technology companies to punish China for its investment policies that effectively force U.S. companies to give up their technology secrets in exchange for being allowed to operate in the country, as well as for other IP practices Washington considers unfair.
The Trump administration is also considering imposing investment restrictions on Chinese companies over and above the heightened national security restrictions, but details on these were not immediately known. 

A U.S. Treasury spokeswoman did not immediately respond to requests for comment.
But lobbyists in Washington expressed concern that Trump’s ambitious tariff plan would also include other labor-intensive consumer goods sectors such as apparel, footwear and toys.

China runs a $375 billion trade surplus with the United States and when Xi Jinping’s top economic adviser visited Washington recently, the administration pressed him to come up with a way of reducing that number.
Trump came to office on a promise to shield American workers from imports and his first action as president was to pull the United States out of the 12-country Trans-Pacific Partnership trade deal.
His administration is in the midst of negotiations to revamp the North American Free Trade Agreement (NAFTA) and last week announced the imposition of tariffs on steel and aluminum imports.
While the tariffs on steel and aluminum, announced last week by Trump, are viewed as relatively insignificant in terms of imports and exports, moves to target China directly risk a direct and harsh response from Beijing.
“If this is serious, the Chinese will retaliate. The key question is, does the U.S. retaliate against that retaliation,” said Derek Scissors, a China trade expert at the American Enterprise Institute, a pro-business think tank.
That would spook stock markets, but Scissors said that the more serious the conflict became, the worse China’s position would become, due to the importance of its U.S. trade surplus.
“Their incentive to negotiate is to head us off from a major trade conflict.”

NOT BIG ENOUGH
The news website Politico earlier reported that the U.S. Trade Representative’s office had presented Trump with a package of $30 billion in tariffs last week, but Trump told aides that this was not high enough.
One Washington business source who had discussed the issue with the White House said the figure had now grown to about $60 billion, with a potentially wider array of products under consideration.
A second person, who is an industry lobbyist in Washington familiar with the administration’s thinking, said the process was being led by Peter Navarro, an eminent economist, and by U.S. Trade Representative Robert Lighthizer, who also favors tariffs as a tool to rebalance trade.
Speaking to reporters in the Capitol, U.S. House Ways and Means Committee Chairman Kevin Brady stressed that Trump was serious about addressing the issue of intellectual property theft with China.
“He’s serious about calling their hand on this, and my understanding is they are looking at a broad array of options to do that,” Brady said.
U.S. business groups, while uneasy about triggering Chinese retaliation, have increasingly pressed Washington to take action on Beijing’s industrial policies, such as market access restrictions and the “Made in China 2025” plan, which aims to supplant foreign technologies with domestic ones.
Shortly after Trump took office, the Information Technology & Innovation Foundation (ITIF), a U.S. technology think tank whose board includes representatives from top companies such as Apple, Amazon, Cisco, Google, and Intel, called for coordinated international pressure on Beijing.
While complaints about China’s abuse of intellectual property rights are not confined to the United States, Trump’s global steel and aluminum tariffs announced last week under section 232 of the Trade Expansion Act of 1962 complicate U.S. efforts to recruit allies to put pressure on China.
A senior European diplomat in Beijing said China would be relieved to see Europe and Washington at odds over the metals tariffs.
“China’s biggest worry has always been joint push-back from its major Western trading partners,” the diplomat said.
A China-based business source with knowledge of discussion among senior European officials said there had been a “clear effort” by the U.S. government over the past six months to introduce a coordinated approach to Chinese industrial policy, but that Trump’s metals tariffs had undermined European support.
“Senior Trump administration officials had directly approached European leaders at a senior level. There had been a willingness to do something together on China. That’s impossible right now. You can’t cooperate when you’re getting whacked around,” the person told Reuters.