Tariff skirmish
Still time to avert full-blown trade war
There is still time for U.S., China to pull back from precipice of trade war
WASHINGTON — The world’s two biggest economies stand at the precipice of the mostperilous trade conflict since World War II. Yet there’s still time to pull back from the brink. Financial markets bounced up and down Wednesday over the brewing U.S.-China trade war after Beijing and Washington proposed tariffs on $50 billion worth of each other’s products in a battle over the aggressive tactics China employs to develop its high-tech industries.
“The risks of escalation are clear,” Adam Slater, global economist at Oxford Economics, wrote in a research note. “Threats to the U.S.-China relationship are the most dangerous for global growth.”
There’s time for the two countries to resolve the dispute through negotiations in the coming weeks. The United States will not tax 1,300 Chinese imports — from hearing aids to flamethrowers — until it has spent weeks collecting public comments. It’s likely to get an earful from American farmers and businesses that want to avoid a trade war at all costs.
Also, China did not say when it would impose tariffs on 106 U.S. products, including soybeans and small aircraft.
Lawrence Kudlow, the top White House economic adviser, sought to ease fears, telling reporters that the tariffs the U.S. announced Tuesday are “potentially” just a negotiating ploy.
The prospect of a negotiated end to the dispute calmed nerves on Wall Street. After plunging in early trading, the Dow Jones industrial average ended up rising nearly 1 percent.
The sanctions standoff started last month when the United States slapped tariffs on imported steel and aluminum. On Monday, China countered by announcing tariffs on $3 billion worth of U.S. products. The next day, the United States proposed
the $50 billion in duties on Chinese imports, and Beijing lashed back within hours with a threat of further tariffs of its own.
Things could easily escalate. The U.S. Treasury is working on plans to restrict Chinese technology investments in the United States.
Making matters trickier, the dispute over Chinese technology policy strikes at the heart of Beijing’s ambitions to become the global leader in cutting-edge technologies like artificial intelligence and quantum computing.
In August, President Donald Trump ordered the Office of the U.S. Trade Representative to investigate China’s tech policies, particularly long-standing allegations that it coerces U.S. companies into handing over sensitive technology to gain access to the Chinese market. The tariffs proposed Tuesday were the result of that investigation.
The U.S. also accuses China of encouraging Chinese hackers to steal trade secrets.
The Trump administration is coming under intense pressure to de-escalate the dispute. American farmers, who disproportionately supported Trump in the 2016 election, are especially outspoken in seeking trade peace. After all, China buys nearly 60 percent of American soybean exports.