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

Arab News - - BUSINESS -

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)

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