President Donald Trump moved Thursday to hit China with stiff new sanctions in response to what officials regard as unfair trade practices, setting up a process that could result in $60 billion worth of penalties on a wide variety of products.
Trump signed a directive instructing the Department of Treasury and U.S. Trade Representative Robert Lighthizer to publish a list of proposed targets within 15 days. After a public comment period, those sanctions will take effect.
“We have a tremendous intellectual property theft situation going on, which likewise is hundreds of billions of dollars on a yearly basis,” Trump said at the White House.
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It comes after a seven-month review of China’s trade policies that place American companies at a competitive disadvantage and force the transfer of technology to Chinese businesses with which U.S. firms are required to partner in order to do business in the giant Asian country.
As he signed the directive, the president indicated that it was not a one-and-done action. “This is the first of many,” he said.
Everett Eissenstat, a member of the National Economic Council, told reporters that the review details how China forces companies to give up technology and to accept less favorable conditions for doing business there than Chinese businesses.
Chinese policy also targets America for investment as a means of gaining market share from American competitors and directs hacking to steal technology outright, he said.
“These findings are very well-documented,” he said. “I think you’ll find the report to be extremely solid and quite persuasive.”
Peter Navarro, director of the White House National Trade Council, pointed out to reporters that Trump — like his predecessors — tried engagement with Chinese leaders. He met with Chinese President Xi Jinping at his Mar-a-Lago resort in Florida early in his presidency.
“The problem is, with the Chinese, talk is not cheap,” he said. “It has been very expensive to the American people.”
Unlike Trump’s predecessors, Navarro said, the current president has moved beyond talk. Navarro noted that the administration in December designated China a “strategic competitor” that engages in “economic aggression” against the United States.
“This was a seismic shift from the era dating back to [former President Richard] Nixon and [former Secretary of State Henry] Kissinger, where we had, as a government, viewed China in terms of economic engagement designed to bring China in as a nation that is more democratic and free and respecting market processes,” he said. “The problem we’ve seen … is that that has failed. That process has failed.”
“This is a dream come true. It’s a defeat of the globalists.”
Experts who long have favored more hawkish policies toward China cheered the decision.
“This is a dream come true,” said Michael Pillsbury, director of the Center on Chinese Strategy at the Hudson Institute. “It’s a defeat of the globalists.”
Pillsbury, author of “The Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower,” told LifeZette that Thursday’s announcement and earlier, more limited tariffs are “pinpricks” that are unlikely to succeed on their own.
“These are still not adequate to bring China to its knees,” he said.
What the sanctions could achieve, Pillsbury said, is to help reformist voices in the Chinese government gain the upper hand. People who warn of an inevitable trade war do not understand the nature of debate in Beijing, he said.
The National Association of Manufacturers (NAM) welcomed Trump’s efforts to counter China’s theft of intellectual property and unfair trade practices. But NAM president and CEO Jay Timmons urged caution. He noted that tariffs risk increasing costs for American manufacturers and consumers, and could trigger a destructive trade war.
“The only way we’ll truly make lasting progress is through a strategic approach that uses both carrots and sticks to accelerate changes to Chinese policies, which should include efforts to forge a fair, binding and enforceable trade agreement with China that requires them to end these practices once and for all,” he said in a statement.
Navarro said China has benefited far more from trade than the United States has. In addition to running a $370 billion annual trade surplus in manufactured goods, he said, China has grown its economy from $1 trillion to $12 trillion since joining the World Trade Organization in 2001 — an 800 percent increase.
He noted that the United States, meanwhile, has averaged 2 percent annual growth since 2000, after averaging 3.5 percent from 1947 to 2000. By one estimate, he said, every $1 billion in trade deficit costs 6,000 jobs. By that estimate, Chinese trade has destroyed 2 million jobs.
Senior administration officials declined to specify the products that might be targeted but said they would be skewed toward high-technology goods and other industries that the Chinese government itself has targeted for domination.
“If China dominates the industries of the future, it will be very difficult for the United States to have a future,” Navarro said.
Pillsbury acknowledge that a trade war could have collateral damage. But he argued that doing nothing would be far worse.
“I don’t see any other option,” he said. “The other option is appeasement.”