The Atlanta Journal-Constitution
Trump plans trade penalties against China
Moves designed to aid U.S. manufacturers, but some fear retaliation.
WASHINGTON — The Trump administration is setting the stage to unveil tough new trade penalties against China early next year, moving closer to an oft-promised crackdown that some U.S. business executives fear will ignite a costly battle.
Several corporate officials and analysts closely tracking trade policy said that President Donald Trump is expected to take concrete actions on a range of disputes involving China within weeks.
Trump is due by the end of January to render his first decision in response to petitions from U.S. companies seeking tariffs or import quotas on Chinese solar panels and washing machines manufactured in China and its neighbors.
U.S. trade officials in both cases already have determined that domestic manufacturers have been injured by surging imports and have recommended that he erect new trade barriers.
Trump could also order new limits on Chinese investment in the United States or raise tariffs unilaterally — a likely violation of U.S. commitments to the World Trade Organization — pending the outcome of a broader investigation into Beijing’s alleged failure to protect foreign companies’ intellectual property rights, analysts say.
And White House action is due on a separate Commerce Department probe triggered by worries about the national security impact of rising imports of Chinese steel and aluminum.
“Their intent is to bring shock and awe,” said Scott Kennedy, an expert on Chinese trade at the Center for Strategic and International Studies. “They’re not kidding around.”
On Dec. 6, Robert E. Lighthizer, the president’s chief trade negotiator, had a contentious discussion of administration trade policy with members of the U.S.-China Business Council’s board of directors, which includes the chief executives of companies such as Chubb Insurance and General Motors, according to three executives familiar with the session who asked for anonymity to describe a confidential meeting.
During the closed-door Washington briefing for chief executives with business in China, Lighthizer said that U.S. complaints about Chinese trade practices could not be resolved simply by additional talks with Beijing, and he appeared indifferent to concerns that the administration’s hard line risked rupturing a $600 billion annual trade relationship.
“It did not go well,” said one person familiar with the exchange.
A spokeswoman for Lighthizer did not reply to a request for comment. The business group declined to comment on what it said was an off-the-record discussion.
It’s not yet clear how extensive the administration actions will be. Trump’s repeated campaign vows to retaliate against China for policies that he says contributed to the loss of millions of U.S. jobs have yet to translate into concrete action. During a visit to Beijing last month, the president blamed his White House predecessors rather than Chinese President Xi Jinping for the yawning bilateral trade deficit.
That gap has only grown since Trump became president, despite his “America First” rhetoric. Through the first 10 months of this year, the United States incurred a $309 billion trade deficit with China, up from $289 billion during the same period one year earlier.
“So far, it’s been the Teddy Roosevelt philosophy turned on its head: Speak loudly and carry a small stick,” said Scott Paul, president of the Alliance for American Manufacturing, a nonprofit established by the United Steelworkers union and major steel makers.
Still, in recent weeks, there have been mounting signs of the president’s intention to act. In a new national security strategy, the president earlier this month described China as a strategic competitor and said that when it comes to trade, the United States “will no longer turn a blind eye to violations, cheating or economic aggression.”
The White House document was issued less than a month after the United States formally told the WTO that China did not qualify as a “market economy” under the trade body’s rules.
In a dispute with the European Union, China insists that it was promised the designation by now under the terms of its 2001 membership in the WTO. The European Union and the United States insist that the Chinese state’s role in the economy remains too large to justify granting China market economy treatment. As a nonmarket economy, China is subject to higher anti-dumping duties under U.S. trade law, making the issue more than a matter of bragging rights.
Administration officials say that China has not lived up to the bargain struck at the time of its accession to the WTO. Market liberalization has slowed or even reversed, especially since Xi became Communist Party general secretary in late 2012. Stateowned enterprises, which enjoy preferential government financing and permit approvals, remain formidable competitors for multinational corporations.
In a U.S.-China Business Council survey, 57 percent of U.S. companies operating in China say they have yet to see any impact from a sweeping package of economic reforms Xi unveiled four years ago.
The trade decisions facing Trump in the next several weeks encompass a range of U.S. complaints: the dumping in U.S. markets of Chinese products such as solar panels, the theft of intellectual property and trade secrets, and economic damage caused by excess Chinese production in key commodities such as steel.
“There needs to be a fundamental, systemic change and a real commitment to market opening by China,” said one senior administration official. “We want China to stop stealing our stuff, live up to its commitment, and don’t distort the international trading system.”
China is sure to respond to any significant move by the United States with measures designed for political impact — such as reversing the recent opening of its markets to U.S. beef exports, Kennedy said.
That would hit states such as Montana that backed Trump last year.
U.S. multinationals operating in China also would be likely to suffer. Some companies might receive unexpected visits from government inspectors or encounter difficulties obtaining permits or licenses. Others could be hit with tax audits or antitrust investigations.
Chinese officials could “make American companies wear small shoes,” said Kennedy, alluding to a traditional Chinese saying that means causing pain or difficulty for another party.
For now, U.S. business leaders are bracing for any impact. Though uncertain as to exactly what the president will do, they anticipate a difficult year ahead.
“Our sense,” said Jeremie Waterman, vice president for greater China at the U.S. Chamber of Commerce, “is that everything is on the table.”