October 2018 Trump and Tariffs on China

October 2018 Trump and Tariffs on China

Trump and Tariffs on China

President Trump announced last Monday that he would impose a 10 percent tariff on $200 billion of Chinese imports to the US that will take effect this week and is set to increase to 25 percent by the end of this year.

This latest round of excises comes on top of a 25 percent tariff already imposed on about $50 billion in Chinese goods.

Demonstrating that the US may have the upper hand, Trump’s announcement that he’s imposing new tariffs on China came in a week that ended with the US stock market skyrocketing to a record high, with the unemployment rate at an all-time low, and wages rising. Financial markets were dismissing the trade tensions between Washington and Beijing, while celebrating the booming American economy.

Also, there is bipartisan support in Congress, including Senators Chuck Schumer (D-NY) and Elizabeth Warren (D-MA), for a harder economic line on China. This support reflects a growing consensus that US policy is not working and that Washington needs to do something in response to China’s intellectual-property theft, forced technology transfers, and joint-venture requirements.

But President Trump needs to recognize that a long trade war between the world’s two largest economies would eventually have harmful effects on the American economy and slow its growth, especially because Chinese imports would mean higher prices for American consumers.

With that in mind, Trump should explain what it is exactly that he hopes to achieve through the pressure he is now exerting on China. His unitary tariff policy will probably not succeed in achieving what should be the main goals of the US, which is to press China to change its trade practices, allow more foreign companies to compete, and protect intellectual property. Washington could achieve these goals more effectively by working with its trade partners to alter Chinese behavior, and re-entering the Trans-Pacific Partnership (TPP), which former President Obama advocated.

–Alyn Hadar,
Chair, Task Force on Foreign Policy