Following US President Donald Trump’s announcement in March to impose tariffs on Chinese products valued at $50-60 billion, the Office of the US Trade Representative (USTR) unveiled the detailed list of about 1,300 products that could be targeted in the new US tariffs scheme on Tuesday. The list is going to face a review process that could last until May before it can take effect.
However, despite the Trump administration’s goal of asking China to cut the annual US trade deficit by $100 billion, the proposed list of Chinese products subject to an additional 25 percent import tariff did not include major Chinese exports to the United States, such as consumer electronics and clothing, which account for almost half of Beijing’s annual exports to Washington.
Instead, the Chinese products targeted under the new US tariffs scheme primarily come from high-tech industries in which China has not yet taken a commanding position in exporting to the United States. The USTR explained in a statement that the proposed list of products "would target products that benefit from China’s industrial plans while minimizing the impact on the US economy." US consumers are likely to pay a hefty price if any steep tariffs were introduced on China-made consumer products such as an iPhone or Nike sneakers.
Targeting China's Unborn Child
By targeting products in industries such as aerospace, information and communication technology, robotics, and machinery, which Beijing strives to dominate under its ambitious "Made in China 2025" plan, the United States aims to take away China’s future growth potential, Chinese economists told Sputnik.
"In a trade war [between the two countries], current trade [structure] is only the first pawn to be deployed to test the other side. The ultimate goal [of the United States] is targeting the future competitive edge of China’s manufacturing industry. It focuses on taking away the opportunity for China’s industry development in the next 10-20 years. This purpose is very obvious," Cheng Dawei, a professor of economics at Renmin University in Beijing, who specializes in International Commercial Diplomacy and WTO related studies, told Sputnik.
Professor Cheng pointed out that the new US list did not try to address the trade deficit against China.
"It’s not about the existing US trade deficit, as the [USTR] Section 301 investigation report did not even mention the trade deficit. The United States just wanted to use the investigation as a starting point to go after China’s core interests," she said.
US trade deficit against China reached a record high of $375 billion in 2017.
The Beijing-based economist argued that the US strategy to target China’s future industrial growth is against existing trade rules under the WTO, which only allows protective measures for domestic industries hurt by external competition or under direct threats.
"Any protective measures need to follow international laws. WTO regulations allow protection of domestic industries that have been hurt by external competition. One important principle [for implementing protective measures] in international law is that damages have taken place. The United States has not proved that China’s future industrial plans have caused damages to it. It’s almost like they want to target our ‘unborn child,’ before it even has any impact on the United States. That’s why I believe the US side is unreasonable," professor Cheng said.
By targeting future growth potential of Chinese industries, the United States is trying to use this strategy as a bargaining chip in trade negotiations with China, Chinese experts suggested.
"On the surface, the United States intends to resolve the massive trade deficit against China. But in reality, it’s part of an overall strategy to disrupt the development of Chinese high-tech industries. The United States could use this as a bargaining chip in future negotiations with China, to demand the Chinese side make further concessions on trade by importing more US products," Wu Xinbo, the director of the Center for American Studies at Fudan University in Shanghai, told Sputnik.
In response to the latest US tariffs proposal on over 1300 Chinese products, the Chinese Ministry of Commerce released on Wednesday a proposed list of 106 US products, including soybeans, automobiles and aircraft, which could be facing an additional 25 percent tariffs. Chinese imports of the listed products valued at about $50 billion in 2017, matching the value of Chinese goods targeted by the United States. The Chinese ministry did not specify when the tariffs on US products would take effect.
"Everything has already been prepared. It’s just we prefer to let the US side show their cards first, before revealing what we have in our hands. What we have shown so far is that we do have solid cards in our hands too. We’re not afraid of you. It’s impossible for us to make concessions under pressure. In a sense, both sides are still preparing for future negotiations. Right now, it’s all about which side sounds louder" Wu said.
Pressure From All Sides
Professor Wu argued that the United States could face more pressure from domestic businesses that could be hurt by prospective steep tariffs from China.
"I believe domestic pressure in the United States will continue to rise, as farm owners and companies like Boeing or GM Motors could all express their discontent, following the latest list China revealed. The pressure could bring the Trump administration to negotiation tables with the Chinese side," he said.
In addition to domestic pressure, the Trump administration could also face a backlash from other trade partners in the world, Professor Wu noted.
"It’s also about the global multilateral trade system. US allies such as Europeans countries and Japan do not agree with the Trump administration taking actions unilaterally. Today, it’s targeting China. Tomorrow, it could start targeting Japan or Germany. All those nations understand this very clearly. The United States faces both domestic and international pressure," he said.
The expert added that as the production chain has become globalized, new US tariffs would not affect China alone.
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