Trump gets bipartisan support for China tariffs
Broad backing amid concerns about a trade war reflects disillusionment with Beijing’s practices.
WASHINGTON — President Trump’s decision to order some $50 billion in tariffs on a wide range of Chinese imports, despite the risk of setting off a wider trade war, met with bipartisan approval Thursday, reflecting the growing disillusionment with Beijing on the part of many American officials and business leaders.
The order was the largest move yet in the president’s rapidly unfolding effort to use taxes on imported goods to counter what he sees as unfair trade practices by other countries. It aimed to stop what U.S. officials describe as a years-long effort by China to steal American technology.
The move came on the same day that administration officials announced a significant scaling back of another major trade initiative — the tariffs against imported steel and aluminum that Trump announced two weeks ago. Officials announced that countries responsible for more than half of U.S. steel imports and a similar share of aluminum would be exempted, a change that more tightly focuses that weapon on China as well.
“We’re in the midst of a very large negotiation” with the Chinese, Trump said in announcing the new tariffs at the White House, implying he would consider modifying the tariffs if China responds. “We’ll see where it takes us,” he added.
Stock market indexes closed nearly 3% lower, largely on fears of a brewing trade war.
The new tariffs are designed to raise prices on Chinese products, such as clothing, laptop computers and toys. Officials who
briefed reporters said the list of more than 1,000 products subject to the tariffs will be made final after a period for public comment, probably this spring.
Trump also will direct the Treasury Department to come up with new restrictions on Chinese investment in the U.S., beyond the rules that now limit foreign purchases of U.S. companies and assets.
White House trade advisor Peter Navarro, a longtime critic of China’s trade practices, called Trump’s move a “historic event” that is part of a “seismic shift” by the administration away from decades of policies that sought to draw China further into the global economic order.
China seeks “domination of the industries of the future” and uses “discriminatory, unreasonable practices” to force U.S. companies to help it achieve that goal, Navarro told reporters before the announcement.
The U.S. has “repeatedly aired its concerns” about those practices, but talks during the Bush and Obama administrations failed, he said. Faced with a pattern of Chinese actions that he estimated had cost the U.S. at least 2 million jobs, Trump decided to act, Navarro said.
Although Trump’s statement emphasizing talks held out the possibility of resolving trade disputes with China, Beijing already has plans to retaliate. U.S. agricultural exports, notably soybeans and hogs, are expected to be early targets, and that raises worries among Trump backers in Midwest and Plains farm states.
China could also hit major U.S. companies like Apple, Ford and Boeing.
A trade war with China could also complicate talks with North Korea over its nuclear program, on which Trump wants Beijing’s help.
Hua Chunying, a spokeswoman for the Chinese Foreign Ministry, emphasized Wednesday that both the U.S. and China have benefited from economic ties, particularly American consumers. China does not want a trade war, she told reporters, “but if our hands are forced, we will not ... recoil from it” and will “take firm and necessary countermeasures to safeguard our legitimate interests.”
Later Thursday, the country’s Commerce Ministry threatened to impose $3 billion in reciprocal measures, including a 25% tariff on U.S. pork and 15% on steel pipes, fruit and wine, according to Bloomberg.
The timing of Trump’s move is based in part on a calculation that with the U.S. economy at its healthiest point in a decade, the country can handle whatever disruptions a trade war with China might bring.
It also reflects the rising influence in the administration of trade hawks, notably Navarro. Free-trade supporters have been in retreat since Gary Cohn resigned as Trump’s chief economic advisor after losing an internal battle over tariff policy.
The confrontation with China shows the effect of Trump’s trademark bluster and his scorn for his predecessors’ caution. But the shift also reflects growing disenchantment with China among U.S. policymakers of both major parties and influential business leaders.
Senate Democratic leader Charles E. Schumer of New York praised the president Thursday morning in a Senate floor speech.
“Today he is doing the right thing,” Schumer said, accusing China of “rapaciously” taking advantage of the U.S. “They steal” U.S. intellectual property, he said, “and we do nothing.”
A leading Republican, House Ways and Means Committee Chairman Kevin Brady of Texas, offered more nuanced praise.
“President Trump is right to take a hard line against China’s dishonest trade practices, which have clearly harmed American workers,” he said in a statement. “The challenge for every president, however, is how to punish China without harming our families, businesses and farmers. Tariffs are taxes, so the next 30 days of input are crucial to make sure we don’t punish American workers and families for China’s misbehavior.”
Pressure from Brady and other GOP congressional leaders, business groups and U.S. allies helped push the administration to scale back the tariffs on metals that Trump had announced.
U.S. Trade Representative Robert Lighthizer told Congress on Thursday that European Union members, as well as Argentina, Australia, Brazil and South Korea, would be exempt from the metals tariffs. Trump had previously said Canada and Mexico would be exempt. The administration also plans to grant exemptions for some industries that buy types of steel that aren’t produced in the U.S.
Action against China has more political support because of a long history of disappointments. When China fully entered the international trading system, becoming a member of the World Trade Organization in 2001, leaders in both parties predicted that would be the first step on a path to greater wealth for China, but also make it less threatening to the rest of the world.
After Congress voted in 2000 to clear the way for China’s entry into the WTO, President Clinton called the move a “historic step toward continued prosperity in America, reform in China and peace in the world.”
Then-Gov. George W. Bush of Texas, who would succeed him, called the vote a step toward a “stronger American economy, as well as more opportunity for liberty and freedom in China.’’
Eighteen years later, that bright promise has faded.
China has benefited hugely: Its per capita income has grown ninefold since 2000, according to the World Bank. But that growth came at a higher cost to U.S. jobs than backers of trade liberalization had expected, and predictions of “reform” and “liberty” in China have largely proved wrong.
U.S. politicians have grown increasingly worried about China’s efforts to get American technology — by forcing U.S. companies to share innovations to do business in China, or by industrial espionage, cyberattacks and other crimes.
Many American business leaders have become more concerned as well.
“China’s theft of American intellectual property and their use of unfair trade practices represent clear threats to manufacturers’ competitiveness and the jobs of American manufacturing workers,” the National Assn. of Manufacturers said in a statement.
But the group warned tariffs “are likely to create new challenges in the form of significant added costs for manufacturers and American consumers” and “run the risk of provoking China to take further destructive actions against American manufacturing workers.”
Last summer, the Trump administration began an investigation of China’s actions, known as a Section 301 inquiry for the U.S. trade law that gives presidents power to retaliate against certain unfair trade practices.
The “very extensive” investigation found strong evidence that China had violated trade agreements and engaged in a pattern of unfair practices, Everett Eissenstat, deputy chief director of the White House’s National Economic Council, told reporters.
The investigation found the Chinese government has hacked U.S. computer systems to benefit Chinese companies, routinely pressured U.S. companies to enter joint ventures with Chinese partners that required sharing valuable technology, and used government funds to buy U.S. companies to get their patents and other intellectual property.
In addition, U.S. companies don’t have the same ability to license intellectual property in China that Chinese companies have, Eissenstat noted. The record “clearly demonstrates that there are unfair practices by China,” he said.
But administration critics say Trump’s “America first” rhetoric and his flouting of long-standing policies in other areas have hurt the international alliances that might have helped the U.S. in a fight with China.
Moreover, the new tariffs come with some political risk for the president, and China will probably use its retaliatory actions to target those pressure points.
On Wednesday, before Trump’s decision, members of Congress expressed concerns about the impact on their home-state industries when Lighthizer appeared before the House Ways and Means Committee.
Other members asked him about the effect on retailers and low-income families if the prices of Chinese shoes and clothing go up.
Lighthizer acknowledged that retaliation was likely, but said that such concerns were not “a sufficient worry that you’re going to say, therefore, we’re not going to stick up for U.S. intellectual property.”
“We can’t have a $375-billion trade deficit and not do anything to defend ourselves,” he said.