Trump raises stakes with sanctions list
Taxes on up to $60 billion worth of imports will target high-tech goods in response to ‘unfair’ licensing rules
On Sunday, Beijing slapped extra tariffs of up to 25 percent on 128 US products, including frozen pork, as well as wine and certain fruits and nuts, in response to US tariffs on imports of aluminum and steel announced last month by the Trump administration.
Fears are growing that the two countries will spiral into a trade war that will crush global growth.
US technology industry officials said they expected the Trump administration’s list to target products that benefit from Beijing’s “Made in China 2025” program, which aims to upgrade the country’s domestic manufacturing base with more advanced products.
The state-led program targets 10 strategic industries for replacing imports with Chinese-made products: advanced information technology, robotics, aircraft, shipbuilding and marine engineering, advanced rail equipment, new energy vehicles, electrical generation equipment, agricultural machinery, pharmaceuticals and advanced materials.
“Foreign technology acquisition through various means remains a prime focus under Made in China 2025 because China is still catching up in many of the areas prioritized for development,” USTR said in its report justifying the tariffs.
US Trade Representative Robert Lighthizer has said that preserving America’s technological edge is “the future of the US economy.”
Reports that the tariff list may also include consumer goods such as clothing and footwear drew strong protests from US business groups, which argued that it would raise prices for US consumers.
While there have been contacts between senior members of the Trump administration and their Chinese counterparts since Trump announced his intention to impose tariffs, there has been little evidence of intensive negotiations to forestall them.
“The administration is following the Japan model from the 1980s,” said a tech industry executive. “They will publish a Federal Register notice of tariffs on certain products, then try to reach a negotiated settlement over the next 60 days.”
During his first stint at USTR in the Reagan administration, Lighthizer employed similar tactics to win voluntary Japanese export restraints on steel and autos.
Wendy Cutler, a former deputy USTR in charge of Asia negotiations, said that addressing the sweeping intellectual property allegations identified by USTR would require major changes to China’s industrial policy. A 60-day settlement may not be realistic in that case.
“I think they have set up a high bar for what they need to achieve, in order not to impose these types of tariffs and investment restrictions,” Cutler said.
STRATEGIC TARGET: A worker polishes steel pipes at a Dongbei Special Steel Group factory in Dalian, China. (Reuters)